The cost of litigation in the US reached a record $US260 billion ($346 billion) in 2004 – about $US886 ($1177) per person in the US, according to the actuaries Tillinghast.

The company says this surpassed the record set in 2003 by $16 billion ($21 billion). The 2005 update analyses US tort costs from 1950 through 2004, with projections through 2007.

US tort costs grew at a slightly faster pace in 2004 (5.9%) than in 2003 (5.5%), but were still well below the high growth rates of 2001 and 2002, which averaged 14% each year.

The 5.9% growth rate was less than the overall US economic growth of 6.6% in GDP. Since 1950, growth in tort costs has exceeded GDP growth by an average between 2% and 3%.

The report says asbestos claims contributed to the surge in tort costs earlier this decade but were less of a factor in 2004. The effect of insured asbestos losses, which totalled about $US5 billion ($6.6 billion) in 2004, was less than in each of the previous three years.

Tillinghast says US tort cost growth since 1950 substantially exceeds US population growth. Even after adjusting for inflation, tort costs per capita have risen by a factor of more than nine between 1950 and 2004.

The study also examined tort costs in several other industrialised nations and found that US tort costs exceed those of other countries by a sizeable margin when measured against GDP.

The US tort costs were 2.2% of GDP, compared with Germany 1.1%, Japan 0.8% and the UK 0.7%. Apart from Italy (1.7%), the other countries examined in the study had tort costs comparable with historic levels observed in the US in the 1960s and 1970s.

Given current trends, Tillinghast expects US tort costs to increase by about 6.5% for the next three years.