As much as an insurance company is obliged to pay a legally admissible claim, it is also obliged to reject claims that are legally inadmissible It must be remembered that almost all insurance coverage are reinsured and/or coinsured with other insurance companies. In the circumstances, if an insurance company settles an inadmissible claim, it may find itself unable to recover the reinsurers' or coinsurers' share of the claim. That would put the company and its management in a spot.
Reputable insurers take pride in settling valid claims, however big the claim maybe. Settlement of sizable claims are often used as marketing tools to enhance the reputation of insurer and to increase the business.
There is nothing sneaky about it. It may sound like "a turkey looking forward to Christmas," to the uninitiated outsider but to those in the insurance industry it means good business sense and professionalism.
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