Tort cost growth slowed in 2005: Report

U.S. tort costs in 2005 reached $261 billion--approximately $880 per person and $4 less per person than in 2004--according to the "2006 Update on U.S. Tort Cost Trends" released Wednesday by Towers Perrin's Tillinghast unit.

Last year's tort cost growth rate of 0.5% was much lower than 2004's 5.7% growth rate and 2003 5.5% growth rate, according to the report, and the $1.1 billion increase over tort costs in 2004 is the smallest since 1997.

The 2006 update analyzes U.S. tort costs from 1950 through 2005, with projections through 2008.

The 0.5% rate of growth in tort costs was less than overall U.S. economic growth as measured by gross domestic product of 6.3%, according to Tillinghast. Since 1950, growth in tort costs has exceeded growth in GDP by an average of 2% to 3%. But during the past 20 years, the ratio of tort costs to GDP has stayed within a relatively narrow range of approximately 2%.

"It's difficult to say whether tort reform measures have impacted this slow down in tort costs growth," Russ Sutter, a principal in the St. Louis office of Stamford, Conn.-based Tillinghast, said in a statement discussing the study. "We have yet to see what, if any, impact the class action reform legislation that was passed in February 2005 will have on future class action claims--as well as whether the newly elected Democratic Congress will have an impact. What has certainly had an impact on tort costs trends has been the decade-plus decline in auto accident frequency, as the basic auto accident is the single largest portion of U.S tort costs."

The report is expected to be available later Wednesday at www.towersperrin.com/tillinghast.