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Towers Watson Publishes 2010 Update on US Tort Cost Trends

Posted on 28 Dec 2010

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The 2010 Update on U.S. Tort Cost Trends published by Towers Watson shows that U.S. tort costs decreased by 2.7% in 2009, with an increase in personal tort costs more than offset by a decrease in commercial tort costs.

Other Key Findings

    •    The U.S. tort system cost $248.1 billion in 2009, which translates to $808 per person, versus $838 per person in 2008.
    •    Overall economic growth in 2009 was -1.3%. As such, the ratio of tort costs to gross domestic product (GDP) shrank in 2009, marking six consecutive years of a decline in the ratio. Since 1950, growth in tort costs has exceeded growth in GDP by an average of approximately two percentage points.

The U.S. economy was a major factor in the magnitude of 2009 tort costs. Both real and nominal GDP fell during the year. The two-year change in real GDP was the lowest since the period from 1979 to 1981. In January, the unemployment rate was 7.5% and rose consistently throughout 2009, to end the year at 10.0%. Due to this lower level of economic activity, opportunities for tort actions also decreased.

The first Towers Watson study was completed in 1985. The most recent study, incorporating results through 2008, was published in December 2009. This update, which provides results from 1950 through 2009, and projections through 2012, has not been funded nor subject to prerelease approval by any outside organization, and was conducted entirely by Towers Watson.