Funny story. Years ago, an insurance consulting firm found itself a little niche –making up numbers about “tort system” costs, exaggerating them beyond all reason, and hyping them to create fear among public officials so everyone’s legal rights were cut. No criticism, no matter how clear and repetitive, has ever deterred this company from issuing the same garbage, year after year.
That insurance consulting firm is now called Towers Watson and recently, it issued its latest refuse of a report, alleging that the U.S. tort system cost $248.1 billion in 2009. That, by the way, is a 2.7 percent drop from last year. In fact over the last 19 years - 1991 to 2009 – their own highly-exaggerated figures show tort costs grew at only 3.3 percent per year, which is less than the GDP (4.6 percent). But you won’t see that emphasized anywhere.
To get a sense of the criticisms, see last year’s report from Americans for Insurance Reform, which we covered here.
One of Towers Watson’s favorite things is to speculate based on nothing. Expect “significant increases” in tort costs next year, they say. Last year, it predicted this increase based on rubbish like the likelihood of future inflation and President Obama’s federal judicial appointments, none of which came to pass. Their own figures decreased. You'd think that would be embarrasing enough to keep them from making more bogus predictions but it hasn't. They're doing it again.
No matter that the company itself admits that its figures have nothing to do with the costs of the legal system like jury verdicts, settlements, lawyers’ fees or any actual costs of what might generally be considered the “tort” system, or that it examines only insurance losses whether or not a lawsuit was even filed, (think “fender bender”) plus insurers’ “guess” (historically, widely overstated) of what future losses could be, plus all of the industry’s bloated overhead (salaries, bonuses, lobbying costs, jet planes etc.). Plus, they cite themselves for much of the data, and don't disclose them.
In other words, it’s a solid report. Solid waste!
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