The Daily Report posted a recent article about a study involving settlements with insurance companies. The study was published this month by the Columbia Business Law Review and the findings basically show that insurance companies would rather spend the extra money to go to court than offer a settlement before trial. The study was written by Jeffrey O’ Connell of the University of Virginia School of Law and Patricia Born of California State University in Northridge and it analyzed settlements for personal injury and product injury cases in Florida and Texas from 1988 to 2004.
The results of the study indicate that insurance companies could save an average of $114,000 per claim or $670,000 for severe injuries by offering quick settlements instead of going to court. It was also estimated that the insurance companies could save $32,000 in legal expenses and approximately $211,000 for severe injury cases.
This study illustrates that both the defendant and plaintiff can benefit from an early settlement. The insurance company stands to save hundreds of thousands of dollars while the plaintiff doesn’t have to wait as long for compensation.
If you ask most Florida personal injury attorneys, you will find that they have represented many cases where the insurance company rejected a reasonable offer before the case went to trial. In the end, the insurance company often had to pay a settlement after the jury found the defendant liable for the plaintiff’s injuries. So, the question remains – why would an insurance company not settle immediately after an injured person files a claim? One theory is that by not offering immediate settlements, the insurance company is able to discourage more claims from other injured parties.