The rise in the number of lawsuits filed in the Los Angeles area is contributing to heightened inflation and an increase in insurance costs. According to the U.S. Bureau of Labor Statistics’ (BLS) Consumer Price Index (CPI), which was released on Feb. 13, prices in the Los Angeles area rose by 1% in January and 2.5% over the 12-month period ending in January 2024. A recent report identified a major contributor to California's CPI as the surge in tort filings and insurance-related lawsuits.
The CPI revealed that certain goods and services in the Los Angeles area experienced an even greater increase compared to inflation. In January, the cost of nonalcoholic beverages rose by 2.4%, while alcoholic beverages saw a rise of 1.4% compared to December. Additionally, apparel costs surged by 10.4%, fuel and utilities costs increased by 1.7%, and household furnishing prices climbed by 4.1%.
Insurance figures present an even more concerning picture for consumers. Nationally, and specifically in California, insurance costs have soared an estimated 20% from this time last year. CarInsurance.com reports that the average premium for full coverage auto insurance in California stands at $2,110 per year, significantly higher than the national average of $1,583 — a difference of $527.
A report from RealClearMarkets titled "The Economic Impact of Mass Tort Litigation" suggests that trial lawyers are capitalizing on vulnerabilities within the legal system for profit, thereby burdening consumers further. David Williams, president of the Taxpayers Protection Alliance and author of the piece, stated that mass tort litigation has become a multi-billion dollar industry causing harm to sectors including medical, automotive, and consumer products. Williams noted that these industries are "routinely shaken down by dishonest trial lawyers who understand that even the threat of mass tort litigation can result in huge settlements."
Williams also highlighted the impact on consumers due to mass tort litigation. Businesses are compelled to increase their prices to cover potential liability costs. "If anybody ever wonders why their automobile or medical insurance is on the rise, thank your local trial lawyer association," Williams remarked. He further pointed out that the U.S. has significantly higher liability costs than its peer nations, resulting in U.S. residents each paying a "tort tax" of $1,300 annually. Williams urged policymakers to address tort reform with the aim of easing inflationary pressures.
The BLS, a part of the Department of Labor as per its website, provides data related to labor economics. The Bureau analyzes and publishes this data for use by government agencies, employers, and the general public.