January 1, 2004 by Canadian Underwriter
Tort costs in the U.S. hit the roof in 2002, climbing a record US$27.4 billion to US$233 billion, reports Tillinghast-Towers Perrin. This amounts to US$809 per person, an US$87 increase over 2001.
The single largest factor in the increase is the reassessment of asbestos liabilities, which grew by US$11 billion last year, or one-third of overall tort cost growth. Other contributing factors include the rise in shareholder lawsuits, class action and large claim awards, medical costs due to personal injury cases and medical malpractice suits.
At the end of 2002, tort costs represented 2.23% of the U.S. GDP, the highest since 1990. The irony is that the U.S. tort system is not efficient when it comes to compensation – less than 50 cents of every dollar awarded actually goes to injured parties, and only 22 cents of each dollar awarded pays actual economic losses of the victim.
TTP predicts tort costs could reach $1,000 per person by 2005.