Tillinghast on the Insurance System

Flawed report from the insurance industry is source of the "tort tax" myth.

Tillinghast Towers Perrin's latest missive on what it describes as the costs of the tort system relies on the same hidden methodology and veiled 'tort reform' rhetoric that has led to harsh criticism in recent years.

In response to a scathing analysis from the Economic Policy Institute, Russ Sutter, primary researcher for the Tillinghast-Towers Perrin report, told the Kansas City Star that "it was true that tort-reform advocates use the data 'in a way that’s probably misleading.'"

Authors Admit the Study is Not a Reflection of the Tort System
Tillinghast's study purports to be an analysis of the tort system, yet hidden beneath headlines such as 'Litigious Society' is the startling admission that "the costs tabulated in this study are not a reflection of litigated claims or of the legal system."

This Study is About the Insurance System
That's because what Tillinghast describes as the 'tort system' is better described as the insurance system. Many of the costs involve claims paid without lawyers. Though Tillinghast won't reveal either the complete data or methodology, it does say that all the information comes from the insurance industry, and its authors admit that while many claims are settled without lawyers they didn't eliminate them from the study because "there's no practical way to segregate them."

An Insurance Company CEO's Salary is Not a Tort Cost
In fact, the study includes other costs with no relation to the legal system, such as claim handling costs, insurance company overhead, and industry CEO salaries – all insurance system costs.

Costs That Don't Go Away
Tillinghast's rhetoric seems designed to convince the reader that these costs will vanish if the right to trial is banished. But the truth is that those who cause injury create virtually all of these costs – real costs such as medical bills and lost wages – that injured consumers would never face if they had not been hurt and that don't miraculously go away by barring the door to the courthouse.

Authors Recognize that Non-Economic Damages Benefit Society
In fact, Tillinghast actually recognizes the value of non-economic damage awards in our society, saying that "compensation for pain and suffering is seen as beneficial to society as a whole."

Updated May 2005