NU Online News Service, Jan. 13, 12:03 p.m. EST
Tort costs dipped 2.7 percent in 2009 but are expected to grow over the next two years as the gross domestic product grows, said Towers Watson.
The global professional services company recently released its "2010 Update on U.S. Tort Cost Trends." In it, Russ Sutter, Towers Watson consultant and author of the report, said, "The lack of a robust economy contributed to a decrease in the opportunity for tort actions."
Tort costs fell for only the fourth time since 1975. The drop in 2009 was the second in the last four years, Towers Watson said.
The decline was observed mostly in commercial auto lines where tort costs fell by 7.4 percent in 2009. All commercial tort costs dropped 5 percent from 2008 to 2009, which offset a slight increase in personal tort costs, Towers Watson said.
Mr. Sutter said Towers Watson had anticipated an uptick in directors and officers liability (D&O) litigation in 2009 related to the credit crisis but the costs came in lower than expected. The effect of an increase in inflation has also not materialized.
However, two new tort actions surfaced during the year—those related to Chinese drywall and automobile recalls, according to the report.
Due to the Deepwater Horizon oil spill, tort costs are expected to increase significantly—about 9 percent—in 2010. But excluding the oil spill, tort costs in 2010 are expected to remain stable as auto and medical malpractice-related torts remain mild.
The U.S. tort system cost $248.1 billion in 2009, or about $808 per person compared with $838 per person in 2008.
As the gross domestic product grows, so will tort costs. Towers Watson forecasts tort costs to increase between 1 percent and 5 percent, with a midpoint of 3 percent in 2011 and again in 2012, with a midpoint of 4 percent. The forecast does not include the impact from the Deepwater Horizon oil spill.
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