US To Tackle Tort Costs From Both Sides
Reinsurance Magazine
February 1, 2005


The cost of the US tort system means it has become a key issue for President Bush's second term - but while a new report says costs continue to rise, others believe inefficient insurance companies are to blame.

US tort costs reached a record $246bn in 2003, or approximately $845 per person, according to 'US Tort Costs: 2004 Update' from Tillinghast.

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The Center for Justice & Democracy (CJD), an organization that is against tort reform and "fights to protect the right to trial by jury and an independent judiciary", argues that the figures say more about the insurance industry than the legal system.

It highlights that the Tillinghast report, states, "the costs tabulated in this study are not a reflection of litigated claims or of the legal system." This, the CJD argues, means the claim that the tort system costs $246bn is a wildly-inflated figure. The CJD goes on to say it considers the figures are generated, "from the wasteful and inefficient insurance industry, even going so far as to include its administrative costs." Tillinghast states, "Our inclusion of such costs has been questioned since those costs are not directly related to the disposition of specific tort claims. We take no position on the efficiency of the insurance industry's administrative expenses."

J. Robert Hunter, director of insurance for the Consumer Federation of America and co-founder of Americans for Insurance Reform, said, "Tillinghast's numbers are wrong and are entirely inappropriate for demonstrating either total costs of the US tort system, or cost trends over time. Policymakers and opinion leaders should consider these figures highly unreliable."

For a copy of the complete article, contact AIR.