I’m not sure if either of your points are quite right.

The first is that auto insurers aggressively fight suits. I think they’re generally settled quickly. Lawyers are brutally expensive, a sustained fight very quickly becomes more expensive than a payout.

The second is the notion that an individuals lifetime premium payments are capping the injury payout in order for an insurer to stay in the black. That isn’t the gamble insurers are making. Their bet is that MOST of thier drivers won’t end up with a massive liability, which is why they can payout an individual liability far in excess of that person’s lifetime payments and still stay comfortably in profit.