The Perryman Group has released a report indicating that the removal of noneconomic damages caps in Colorado could lead to an annual loss of nearly $2.1 billion in gross state product and 15,500 jobs, including multiplier effects.
High tort costs are known to affect state economies by increasing business expenses and influencing the overall economic environment. According to studies, states with higher tort costs often face slower economic growth and reduced job creation compared to those with more balanced legal climates. The U.S. Chamber Institute for Legal Reform suggests that excessive tort costs can diminish a state's attractiveness to businesses and impact local employment rates.
In Colorado, the cap on noneconomic damages in personal injury cases was established at $250,000 in 1986 and has been periodically adjusted for inflation, reaching approximately $613,760 as of 2024. The cap aims to provide predictability and limit the financial impact of lawsuits on businesses and insurers. According to the Colorado General Assembly, these limits help stabilize insurance premiums and overall business costs within the state.
The report from the Perryman Group estimates significant economic repercussions if these caps are removed, projecting a $2.1 billion annual loss in gross state product along with a reduction of about 15,500 jobs across related sectors due to multiplier effects. Further losses in personal income and state/local tax revenue are also anticipated based on economic modeling and potential increases in legal system costs.
The Perryman Group is comprised of analysts specializing in economic research, litigation services, and impact assessments for clients ranging from governments to Fortune 500 companies. Dr. M. Ray Perryman, President and CEO, brings over four decades of experience in economic analysis and has collaborated with leading law firms and global corporations. The group's expertise includes developing complex economic models and providing expert testimony in legal and public policy contexts.