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Study: Tort Costs Slow in 2005

U.S. tort costs rose just 0.5 percent in 2005, much lower than the 2004 growth rate of 5.7 percent and the smallest increase in tort costs since 1997, concludes the 2006 Update on U.S. Tort Cost Trends, a study conducted by the insurance and financial services consulting firm Tillinghast. On a per-capita basis, the total $261 billion cost of the tort system dropped $4 per person, to $880.

The biggest contributor to the overall decline in tort costs has been the decade-plus drop in auto accident frequency, because "the basic auto accident is the single largest portion of U.S. tort costs," Tillinghast principal Russ Sutter said in a statement. Analyzing tort costs from 1950 through 2005, the study predicts 2006 growth will be 3.5 percent, while the following two years will see a slightly higher growth rate of 4.5 percent.

The study measures direct costs of tort cases, which include benefits paid or expected to be paid, defense costs and administrative expenses. Critics of the study -- such as Ted Frank at PointofLaw.com -- say the study's greatest failing is that it does not account for the tort system's indirect costs, "which by far outweigh the direct costs."

Posted by Robert J. Ambrogi on December 19, 2006 at 05:05 PM | Permalink | Comments (0)

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