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Lawsuit Costs Are Escalating – Could Liability Insurance Rates Be Going Up?

Makes sense. When the economy slows, people look for ways to make money… like lawsuits? What do you think?

Civil litigation costs rose only 1.1 percent in 2008, but this year the percentage may have nearly tripled, driven up by damage from the financial crisis and medical malpractice cases, a consulting firm reported.

The $2.7 billion 2008 increase in tort was listed in the Towers Perrin 2009 Update on U.S. Tort Cost Trends. The uptick in 2008 is the second cost escalation since 2005 and follows a $5.1 billion increase in 2007, the company said.

According to the study, the relatively slight increase last year is due to several factors, including a decrease in miles driven, which kept personal auto and commercial auto costs in check and a slight decrease in medical malpractice.

In the future, with the potential for increases in the areas of employment practices and medical malpractice, as well as litigation associated with professional services errors and omissions in the wake of the financial crisis, Towers Perrin said it is estimating that U.S. tort costs will increase 3 percent in 2009, an additional 4 percent in 2010 and 6 percent in 2011…
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Posted in Insurance Industry, Lawsuit Abuse.

By Aaron Park
December 15, 2009

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