A new study on America's tort system is making waves, particularly in the insurance business, and should be reviewed by all insurance agents. The study, Jackpot Justice: The True Cost of America’s Tort System (see here), concludes that the total annual accounting cost of the US tort liability system is $865 billion, equivalent to an 8% tax on consumption or a 13% tax on wages. This estimate is significantly higher than other estimates of tort cost because, its authors say, it is more comprehensive. It is equivalent, on an annual basis, to $9,827 tax for a family of four.
The United States spends 2.2 % of GDP on direct tort costs, significantly more than other advanced countries. Advanced countries spend on average .9% of GDP on direct tort costs.
The authors have a brief video summary on YouTube (see here) and an editorial piece in the Wall Street Journal (see here, sub. req.) The researchers have also developed a test for your tort literacy (see here).
Specialty Insurance Expertise: Tennant Risk Services
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