The Tort Threat

Tort issues are a persistent threat for insurers everywhere. Over the course of decades the abuse of the U.S. legal system has had a direct and tangible impact on insurer operations. This new report, written by Robert Hartwig, an economist and president of the Insurance Information Institute (I.I.I.), and Claire Wilkinson, vice president – Global Issues of the I.I.I., examines how the change in political regime following the November 2008 elections and a deteriorating economy are reshaping the liability climate in which insurers operate. In recent years, considerable successes at tort reform at both the federal and state level appear to have had a restraining influence on the rate of growth of U.S. tort costs. However, after a brief decline of 5.6 percent in 2006, tort costs are on the rise again. Against the backdrop of the financial crisis and 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.