Tillinghast Tort System Cost Study Under Fire

January 18, 2005

National consumer groups are criticizing a leading consulting firm’s annual study of U.S. tort system costs, claiming the report “has nothing to do with the costs of litigation, courts or the legal system.”

The report under fire, “Trends and Findings on the Cost of the U.S. Tort System,” is produced annually by Tillinghast-Towers Perrin, an insurance industry-consulting firm.

J. Robert Hunter, director of insurance for the Consumer Federation of America and co-founder of Americans for Insurance Reform, said, “Tillinghast’s numbers are wrong and are entirely inappropriate for demonstrating either total costs of the U.S. tort system, or cost trends over time. Policymakers and opinion leaders should consider these figures highly unreliable.”

Tillinghast’s latest report put tort system costs at $246 billion, which Hunter says is a “widely-inflated” figure because it is based on insurance industry administrative and claims costs that are not part of any tort claims.

According to the critics, the latest Tillinghast report includes a disclaimer that “the costs tabulated in this study are not a reflection of litigated claims or of the legal system.”

Tillinghast also notes, “Our inclusion of such costs has been questioned since those costs are not directly related to the disposition of specific tort claims. We take no position on the efficiency of the insurance industry’s administrative expenses.”

The consumer groups maintain that Tillinghast has never examined jury verdicts, settlements, lawyers’ fees or any costs that might be considered part of the legal system. Indeed, the study even includes insurance claims “with no suits filed.”

The study’s figures have been used by business groups and politicians, including President Bush, as evidence that costs of the system are too high.

Joanne Doroshow, executive director for the Center for Justice & Democracy, stated, “Tillinghast’s figures are so misleading that they are completely irrelevant to any discussion of the civil justice system.”

For further information see http://centerjd.org

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