U.S. Tort Costs Up Slightly in 2007; Significant Increases Anticipated for 2008

Continuing a decade-long tracking of U.S. torts, Towers Perrin has issued its 2008 report, which measures tort costs for 2007 and shows trends dating back as far as 1950.

As the table below shows, over the aggregate period of the study, U.S. tort costs have surpassed the growth in the gross domestic product. However, since 2002, the pace of cost increases has slowed considerably.

After a decline of 5.6% in 2006, U.S. tort costs rose 2.1% in 2007. According to the study, the $5.1 billion increase was due primarily to growth in the frequency of automobile accidents. Although tort costs rose last year, their impact on the economy lessened — the fourth consecutive year of a decline in the ratio.

Towers Perrin anticipates a rise in U.S. tort activity over the next several years, beginning in 2008, due to factors such as the subprime mortgage debacle and the worldwide financial crisis. Potential defendants include mortgage brokers, appraisers, investment banks and others.