The Perryman Group has reported that excessive tort costs impose an estimated annual burden of $20.97 billion on New Jersey consumers. This equates to $2,257 per person or $5,925 per household, impacting prices and earnings across a wide range of everyday goods and services.
According to the report, these excessive tort costs in New Jersey are due to inflation and lost earnings, amounting to $9.85 billion and $11.12 billion respectively. The increased costs affect daily necessities such as groceries, prescriptions, and insurance. Home insurance costs are inflated by nearly 4.7%, while health insurance sees an increase of almost 2.8% due to these economic inefficiencies.
The Perryman Group states that an unbalanced civil justice system misdirects valuable economic resources, contributing to inflation by approximately $320 billion annually and reducing earnings by $354.4 billion. This results in everyday goods and services being about 1.32% more expensive than they would be under a more balanced system. Consumers also experience broader consequences such as fewer healthcare providers and slower innovation. The findings suggest that reforming the tort system could provide significant economic benefits nationwide.
Findings from Swiss Re Institute highlight that social inflation—the non-economic rise in insurance claims costs—has become a significant factor driving up liability expenses in the U.S. From 2017 to 2022, social inflation averaged 5.4% annually in the U.S., surpassing the 3.7% rate of economic inflation. This trend is fueled by rising mega-verdicts, third-party litigation funding, and evolving legal strategies, further pressuring consumer prices and insurance costs.
The Perryman Group is a Texas-based firm specializing in economic and financial analysis with expertise in impact assessments, economic forecasting, and policy evaluation across various industries.
