The Tort Threat

There’s been a lot of media buzz about the Institute for Legal Reform’s (ILR) Faces of Lawsuit Abuse campaign that features victims of frivolous lawsuits and is coming to a movie theater near you. The stories of small business owners and individuals who have dealt with abusive lawsuits are now running in ads on radio, television and the Internet and shortly as movie trailers for audiences nationwide. The Web site includes a feature where visitors can vote for last month’s most ridiculous lawsuit. A message repeated but not always taken on board is that litigiousness drives up the cost of liability insurance, as well as the cost of goods and services. A new I.I.I. paper “The Tort Threat in 2009: A Changing Liability Landscape† explains that over the course of decades the abuse of the U.S. legal system has had a direct and tangible impact on insurer operations. It notes that after a brief decline of 6 percent in 2006, tort costs are on the rise again. According to the report, political forces can have a powerful influence on the tort system and against the backdrop of the financial crisis and the downturn in the economy, the change in administration as well as shifts in the U.S. Congress herald a sustained period of increased regulatory and legislative activity. These factors, combined with the plaintiff friendly legal system that exists in the U.S. are causing the tort pendulum to swing against businesses and their insurers once more.

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