U.S. tort costs are steadily rising. According to ILR’s latest research, costs and compensation in the U.S. tort system amounted to $443 billion in 2020, equivalent to 2.1 percent of U.S. GDP and $3,621 per American household. These are the highest tort cost levels since at least 2016, the earliest year for which we have data.
Tort Costs in America, produced by researchers at the Brattle Group, provides an estimate of the costs and compensation paid in the U.S. tort system using insurance data and estimated self-insured costs. The report reveals that the costs of the tort system grew at an average annual rate of 6% a year over the period 2016 to 2020, outpacing the growth in inflation and GDP over the same period. The study also breaks down tort costs by state, revealing significant variations among them. For example, tort costs per household came to about $2,000 in states like Maine, New Hampshire, and South Dakota, but reached over $4,500 in states like California, Florida, and New Jersey. The report also shows that the tort system is highly inefficient at delivering relief to claimants—only 53 cents of every dollar paid in the tort system made its way to claimants, while the rest went to litigation costs and other expenses.
These figures, and others found throughout the report, should send a clear signal to policymakers that America’s runaway lawsuit problem urgently needs fixing.