This 1997 book by Peter A. Bell and Jeffrey O’Connell sadly remains relevant.
From Chapter 3:
In fact, almost no one now buys insurance to pay themselves for pain and suffering or any other form of intangible harm. From a purely compensatory viewpoint, therefore, tort compensation for intangible harms can be deemed excessive. (page 63)
Quite often the starting point for bargaining over the value of pain and suffering is a multiple of the actual economic losses (what lawyers and insurance adjusters term special damages, or specials). To determine what to offer for pain and suffering (general damages), insurance adjusters often multiply by three, perhaps four, maybe more, the amount of the claimant’s medical bills and wage loss. Although this solution allows insurance adjusters greater clarity in deciding the dollar value of intangible injuries, it also offers claimants tremendous inducements to “pad” their claims, especially smaller claims. (page 64)
Quite simply, tort law is alleged to be regressive because a major component of most tort awards consists of the plaintiff’s lost income. Persons who are wealthy – those with high income before the accident – will collect far more than the relatively poor when damages are awarded for lost wages. (page 66)
So long as massive transaction costs – especially in lawyers’ fees on both sides – continue to plague tort law, almost any alternative compensation system will look better in comparison. (page 67)