Tort inflation: Steady today, but for how long?

Insurance Information Institute today published a paper Bob Hartwig and I wrote about the state of tort inflation in the United States. The short story – things are benign at the moment, but could heat up in a hurry.

The good:

  • Tort costs per person have been stuck at about $830 per person the past couple of years.
  • Securities class action settlements rose to $3.8 billion last year, but remain far below their peak at the popping of the stock bubble.
  • Malpractice costs have fallen, in nominal terms, four years running, a sign that malpractice caps work.

The not so good:

  • Court decisions in Georgia and Illinois threaten malpractice caps, and this could signal a new judicial trend.
  • The percentage of firms that expect to be sued is rising.
  • The plaintiff bar continues to search for “the next asbestos” or “the next Big Tobacco.” Current possibilities include Chinese drywall and global warming.

The entire study is here. An executive summary is here.

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