Why might an insurer decide to go to court despite the risks involved?

An insurer might decide to go to court to avoid appearing lenient on claims. This approach can be strategic; by taking a firm stance in court, an insurer demonstrates to both the public and other potential claimants that it is serious about defending its policies and limits. This helps maintain a reputation for rigorously evaluating claims and discouraging potential fraudulent claims by setting a clear expectation of challenge.

While the other options touch on various aspects that might influence a decision to enter litigation, the notion of maintaining a strict stance on claims can directly impact how future claims are perceived and handled. Thus, it underscores the importance of an insurer's reputation in the eyes of policyholders and the broader market.