Psychological Injury: Australia’s Fastest-Rising and Costliest Claims
Psychological injury is now the defining cost pressure in Australian workers’ compensation. Mental-health claims are rising faster than any other category, they keep workers off the job far longer than physical injuries, and each one costs a multiple of the average claim. For employers and insurers, the trend is no longer a wellbeing footnote — it is the single largest driver of scheme cost growth and premium volatility.
This analysis sets out what the published data from Safe Work Australia, SIRA and the NSW Government actually shows about psychological injury claims, why they behave so differently from musculoskeletal claims, and where early, coordinated clinical intervention changes the trajectory.
The costliest claim category in the country
Safe Work Australia’s most recent serious-claims data tells a stark story. In 2022–23 the median time lost from a mental-health-condition serious claim was 35.7 working weeks — almost five times the 7.4 weeks lost across all serious claims. The median compensation paid was $67,400 for a mental-health condition, more than four times the $16,300 median across all serious claims (Safe Work Australia, Key Work Health and Safety Statistics Australia 2025).
Volume is climbing in step with severity. Safe Work Australia recorded 17,600 mental-health-condition serious claims in 2022–23 — 12.0% of all serious claims, up from a much smaller share a decade earlier. The regulator has reported that mental-health condition claims rose by roughly 37% across recent years, a growth rate no physical injury category comes close to matching.
Why insurers are sounding the alarm in NSW
Nowhere is the pressure more visible than in New South Wales. SIRA reports that around 11% of all active NSW workers’ compensation claims now relate to a psychological injury, compared with about six per cent a decade ago (SIRA, Psychological injuries — a guide for workers and employers).
The cost trajectory is steeper still. In a March 2025 statement to the NSW Parliament, the Treasurer reported that the average cost of a psychological injury claim had risen from $146,000 in 2019–20 to $288,542 in 2024–25. On the NSW Government’s figures, psychological claims make up around 12% of claims but roughly 38% of total scheme cost — a concentration of expenditure that has driven guideline reform and premium increases across the scheme.
Return to work is where the money is lost
The reason psychological claims cost so much is not the price of treatment — it is duration. Return-to-work outcomes diverge sharply by injury type. On Safe Work Australia and SIRA reporting, around nine in ten workers with a non-psychological injury are back at work within 13 weeks, compared with only about four in ten workers with a psychological injury claim over the same period.
Every week a worker stays off amplifies cost in two directions: weekly compensation accrues, and the probability of ever returning to work falls. That compounding is exactly why claim duration is the metric that determines a psychological claim’s final cost — a dynamic we examine in detail in our analysis of how claim duration drives injury-management cost, and in the wider breakdown of the true cost of a workplace injury.
Psychosocial hazards are now a regulated obligation
The regulatory environment has moved from encouragement to enforcement. Model WHS laws now require persons conducting a business or undertaking to identify and control psychosocial hazards — job demands, low control, poor support, bullying and exposure to trauma — in the same way they manage physical risk. The compliance and claims implications of that shift are set out in our guide to psychosocial hazard duties under WHS in 2026.
For NSW, the picture also changes on the claims side. Revised Workers Compensation Guidelines taking effect from 1 July 2026 tighten how psychological injury claims are assessed, making compensability conditional on a stricter connection between the injury and employment. Whichever way the eligibility line moves, the operational lesson is unchanged: the cheapest psychological claim is the one managed early and well.
Early intervention is the lever that moves the number
The evidence points to a single, actionable conclusion: intervene early, coordinate the care, and keep a safe connection to work. HealthPlex delivers this through an integrated model across our national clinic network.
Timely access to our registered psychology services so a worker is assessed and supported in the window where recovery is most achievable, not months into a claim.
Graded, functional recovery plans built with the employer and treating team, aligned to the SIRA framework and focused on a safe, durable return.
Fitness-for-role and psychological screening through our corporate medicals program, helping employers identify and manage risk before it becomes a claim.
Programs measured on functional recovery and return-to-work, consistent with the shift to value-based care in workers’ compensation.
For insurers and self-insured employers, the maths is simple. A psychological claim that resolves in the first quarter costs a fraction of one that drifts past a year. Early clinical intervention is not a wellbeing gesture — it is the most direct cost-control lever available on the fastest-growing, most expensive claim type in the country.
Frequently asked questions
How much longer do psychological injury claims take than physical claims?
Substantially longer. Safe Work Australia reports the median time lost for a mental-health-condition serious claim in 2022–23 was 35.7 working weeks, almost five times the 7.4 weeks lost across all serious claims.
What does a psychological injury claim cost on average?
Nationally, Safe Work Australia recorded a median compensation of $67,400 for mental-health-condition serious claims in 2022–23, versus $16,300 across all serious claims. In NSW, the Government reported the average psychological claim cost rose to $288,542 in 2024–25.
Why are psychological claims rising so quickly?
Growing recognition and reporting of work-related mental-health conditions, combined with regulated psychosocial-hazard duties, have driven the increase. Safe Work Australia has reported mental-health condition claims rose by roughly 37% across recent years, and SIRA reports psychological claims now make up around 11% of active NSW claims, up from about six per cent a decade ago.
Does early intervention actually reduce claim cost?
Because psychological claim cost is driven largely by duration, and return-to-work probability falls the longer a worker is off, timely assessment and coordinated return-to-work planning are the most direct levers for reducing total claim cost. HealthPlex delivers this through rapid psychology access and graded recovery planning across its national network.
Alex W. writes on occupational health, injury management and workers’ compensation policy for HealthPlex, drawing on the company’s clinical teams across its national network of occupational and allied health clinics.
General information about psychological injury and workers’ compensation trends in Australia; not a substitute for individual clinical or legal advice. Scheme rules, eligibility and guidelines change — confirm current details with Safe Work Australia, SIRA or the relevant scheme. Figures are as published by the named sources at the dates cited.