If Gawker could settle and have their insurance company take the hit then Gawker itself would remain relatively unscathed. By preventing the insurance company from paying out, Hogan/Thiel have made it more difficult to win their case and more difficult to collect to monetary award. Also - by not settling Hogan's legal bills increase as the battle rages on. Gawker can outspend Hogan, but Gawker can't outspend Thiel.