Why Trump’s Deregulation Will Reshape Workers’ Comp in 2025
Trump deregulation policies have created both opportunities and challenges for the insurance industry. During his first term, the administration:
Achieved a 5.5:1 deregulation ratio, exceeding initial 2:1 target
Implemented 321 regulatory actions
Finalized 126 deregulatory rulemakings
Achieved 53.9% classification as deregulatory under Executive Order 13771
The implementation of Trump’s deregulation policies today follows a clear pattern established during his first term. But this time around, the administration is pushing even harder. I’ve been pounding the table about the potential of deregulation for a little while now. While the Trump tariffs continue their on-and-off status that seems to change every couple days, deregulation could be the one thing that keeps the economic expansion going while pulling attention away from debt, deficits and the dollar.
Deregulation’s impact on workers compensation has been significant for insurance providers. The administration’s approach to workers’ compensation regulation has several key components that are already reshaping the industry:
Executive Order Impact (February 2025)
In February, Trump signed an executive order that mandated review of unemployment insurance and workers’ compensation regulations with a focus on identifying potentially unconstitutional regulations and evaluating business burden reduction opportunities.
Companies are reassessing their strategies in response to the deregulation impact on workers compensation. The anticipated changes include:
Reduced enforcement activity
Lower compensation rates
Stricter eligibility criteria
Fewer insurance carrier audits
Workers compensation deregulation has led to significant changes in claims processing procedures. For companies providing claims management services, this creates both opportunities and challenges. The opportunity lies in developing more streamlined processes that can operate with less regulatory oversight. The challenge comes from potentially increased variability in state-level requirements as federal standardization decreases.
Risk Management in a Deregulated Environment
The story here is the disconnected relationship between deregulation and risk management needs. Traditionally, the two are negatively correlated - less regulation typically means less demand for risk management services. In recent weeks, however, we’ve seen the deregulation push accelerate but risk management demand keep drifting higher. This is a reflection of the market’s concern over the uncertain implementation timeline and the potential for increased litigation in a less regulated environment.
Companies are developing specialized risk management solutions under deregulation to address new market needs. The insurance and risk management industry is implementing several measures:
Enhanced due diligence processes
More thorough risk assessments
Policy modifications
Increased premiums to offset perceived risks
Narrower coverage terms
The deregulation of corporations has reduced compliance costs for many businesses. However, it has also created a more complex risk landscape that requires sophisticated management. This creates an opportunity for risk management firms to develop new service offerings that help clients navigate this changing environment.
The Liability Claims Management Transformation
One of the more interesting developments is how liability claims management is evolving under the new regulatory approach. The pace of workers compensation deregulation has accelerated in 2025, creating a need for more sophisticated claims management solutions.
The healthcare executive order signed in April 2025 has had several key effects:
Extended timeline for Medicare drug price negotiations
Potential increase in medication costs for workers’ compensation insurers
Supply chain disruptions due to domestic production emphasis
These changes create both challenges and opportunities for claims management providers. The challenge lies in managing potentially higher costs and more complex supply chains. The opportunity comes from developing expertise in navigating these new complexities and offering that expertise as a value-added service to clients.
Future Outlook: Navigating Uncertainty
The future of workers compensation under deregulation remains uncertain but promising for innovative companies. Industry leaders are preparing by investing in technology and developing more flexible service models.
Peter Dugas from Capco highlights several key concerns that will shape the industry moving forward:
Unprecedented pace of regulatory changes
Need for enhanced monitoring across multiple agencies
Increasing importance of geopolitical risk management
Growing liquidity concerns
If we continue to get a relative easing on the trade front (meaning we don’t go back to 100%+ tariffs and nothing really sticks for long) and Q3 can deliver a positive growth story, I think there’s a case to be made that the workers’ compensation and risk management sectors have some upside potential in the near-term.
The Bottom Line
The bottom line is that something significant is happening here. It feels like we’re looking at a real transformation in how workers’ compensation and risk management operate in the United States. The big bet, as I’ve said repeatedly, is on deregulation.
If we get the eventual push towards deregulation that Trump has talked about, it could be another big tailwind for companies that can adapt quickly. With so much struggle to push through tariffs and other economic policies, I think deregulation may become the ultimate calling card that finally works.
Overall, I think it comes down to what you believe will happen with deregulation. If you believe the administration will successfully implement its 10-to-1 deregulation agenda, then companies that provide flexible, technology-enabled workers’ compensation and risk management solutions are likely to outperform. If you’re more skeptical about the implementation timeline or effectiveness, then traditional providers with established regulatory expertise may be the safer bet.
Either way, this is a sector worth watching closely as the regulatory landscape continues to evolve.
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