U.S. tort costs rise modestly in 2003

U.S. tort costs continued their upward trend, although at a far less dramatic rate in 2003, according to a new study by Tillinghast.
In its annual review, the research firm finds tort costs rose 5.4% in 2003, exceeding overall economic growth which was up 4.9%. Overall tort costs were US$246 billion in 2003, or US$845 per person. This compares with a per-person cost of US$850 in 2002.
However, the rate of increase was well below that seen over the previous two years, in part, Tillinghast says, because of more moderate tort costs related to asbestos via commercial insurance. Nonetheless, tort costs have increased more than a hundred-fold in the past 50 years, and exceeded GDP growth by an average two to three percentage points each year.
And the reassessment of asbestos liabilities was the largest contributor to rising tort costs in 2003, accounting for US$9 billion of the increase.
Medical malpractice costs have risen an average 11.8% annually since 1975, compared to an average 9.2% rise in other tort costs. In 2003, med-mal tort costs were US$27 billion, or US$91 per person, compared to US$5 in 1975.
Also, rising class action lawsuits, which are beginning to outpace individual lawsuits, promise to add to the cost burden in the future.
In light of a lack of legislative reform to curb these two specific tort areas, Tillinghast says it cannot rule out further cost increases moving forward, likely on the order of 5%-8% annually. At this rate, tort costs will reach US$1,000 per person by 2006.