Frivolous lawsuits?

Why do people continually sue property insurance companies? The simple answer, which keeps claims and litigation managers at Florida property insurance companies awake at night, is that it's their own fault.

It seems counter-intuitive. Insurance companies should want to limit lawsuits. However, they often settle most first-party lawsuits rather than litigate aggressively. Thus, there's an increase in claims.

From the plaintiff attorney's side, there is an incentive. Because Florida has a statute providing attorneys' fees for first-party property lawsuits, plaintiff attorneys file lawsuits because insurance companies often settle rather than go to trial. When insurance companies settle virtually every lawsuit, particularly those without merit, it spurs more lawsuits.

Certainly, when a lawsuit comes in that should have been paid on the front end, looks clearly underpaid, or involves claims decisions that could be misconstrued during discovery, settle it before the defense lawyer incurs fees. But first institute a system to evaluate each case from the beginning--don't assume cases should always be settled. Blindly allowing insurance defense lawyers to litigate freely, and then maybe settle on the figurative courthouse steps, is not a sound business model.

I've heard plaintiff's attorneys say "[this carrier] settles every case for $7,500 plus fees" or "I sue [this insurer] all the...