The growth of U.S. civil litigation costs slowed considerably in 2005, according to a study published today.

The Tillinghast business of Towers Perrin reported that U.S. tort costs totaled $261 billion in 2005, representing only a .5 percent rise from the previous year.

That figure compares to a 5.7 percent rise in 2004 and a 5.5 percent rise in 2003.

Tillinghast Principal Russ Sutter said it was difficult to measure the impact of tort reform measures on litigation costs.

"What has certainly had an impact on tort cost trends has been the decades plus decline in auto accident frequency, as the basic auto accident is the largest single portion of U.S. tort costs," he said.

Asbestos costs continue to be less of a factor in overall commercial tort costs. While insured asbestos losses expanded an additional $7 billion in 2005, the total cost was lower than the comparable increases in 2002, 2003 and 2004. "As the growth of asbestos-related tort costs has continued to drop over the past couple of years, so has the growth of commercial tort costs overall," Mr. Sutter said.

The report forecast growing tort costs in the next couple of years, seeing a 3.5 percent rise next year and 4.5 percent the following two years.

Among the factors affecting the increase will be any impact from the rise in stockholder suits against directors and officers over backdating of options and the impact of class action litigation passed by Congress in 2005.

However, Morgan Stanley property-casualty analyst William Wilt in a recent report found evidence from other surveys indicating that insurers face more litigation.

He cited a study conducted by the national law firm of Fulbright and Jaworski that noted the number of companies reporting more than 50 lawsuits commencing during the past year was up 23 percent versus 11 percent a year earlier.

As for any impact from the federal class action reform law of 2005, the survey noted three-fourths of executives said it had no meaningful impact on their corporations.

This article originally appeared in The National Underwriter P&C. For the complete article, please click here.

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Tort Costs slowed in '05

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