Tort Damage Is More Than Just Asbestos
May 8, 2002
Experts warn that if the momentum of tort litigation costs is not slowed, it could, in the space of the next few years, easily crush vital parts of the economy.
- In that time, tort costs could increase twice as fast as the economy, predicts insurance consultancy Tillinghast-Towers Perrin -- from $200 billion last year to $298 billion by 2005, equal to 2.4 percent of Gross Domestic Product.
- Since 1994, the average jury award in tort cases as a whole has tripled to $1.2 million; in medical malpractice cases it has tripled to $3.5 million; and in product liability cases is has quadrupled to $6.8 million, according to Jury Verdict Research.
The woes of companies that had only a tangential relation with asbestos years ago are well known. But the rising costs of tort litigation are spreading throughout the economy.
Many parts of the country, particularly rural areas, will soon be without medical specialists because the costs of liability insurance have become unbearable and, sometimes, insurance is unattainable. Drug companies may elect to stop producing vital but less profitable drugs. Construction companies could give up building the condos and high-density projects necessary to affordable living, because such projects are especially vulnerable to suits over building defects. Smart corporate directors have come to recognize that the income and prestige that come with serving on boards are not worth the risk to their personal assets.
And the cost of tort litigation for the average citizen just keeps rising -- from around $100 in 1950 to a projected $1,000 per person in 2005, in constant 2002 dollars.
Source: Michael Freedman, "Tort Mess," Forbes, May 13, 2002.
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