NU Online News Service, June 29, 11:45 a.m. EDT
There are signs of tort inflation in 2010 and 40 percent of companies anticipate it, said the Insurance Information Institute (I.I.I.) in a recently released report.
The report, "Tort Inflation 2010: Stability Today, But For How Long?" examines some factors that could lead to an increase in legal disputes–a trend tracked by the institute because it could correlate to higher insurance costs.
The oil spill in the Gulf of Mexico "could tap a host of liability coverages" in the near future, and one law journal cited in the I.I.I. report noted that lawyers see it as having the possibility to become "one of the biggest class actions in U.S. history."
Additionally, Toyota faces dozens of class-action lawsuits, defective Chinese drywall could be another target of mass torts, and global warming has already generated claims against companies, I.I.I. said.
The institute also noted that Illinois and Georgia have overturned medical malpractice caps, and other states are considering the same.
Other factors include the observation by I.I.I. that more elected officials are "sympathetic to plaintiffs' attorneys." The economy furthermore spawns discrimination lawsuits.
A survey by international law firm Fullbright and Jaworski shows 40 percent of companies anticipate more legal disputes in the future. This includes 56 percent of insurance companies, up from 35 percent a year ago.
Tort costs have increased at twice the rate of inflation, leading insurers to constantly consider the factor in rates because claims received by a liability insurer are not paid until several years from now, with some settlements taking even longer, I.I.I. said.
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