New Jersey auto insurer the Prudential Group was ordered last week to refund $25.1 million on 325,000 auto policies in the state because the company’s auto business received more profit than the law allows.
The refunds, which will be based proportionately on the amount of money policyholders had added to Prudential’s profits, averages $77 for each auto insurance policy. Banking and Insurance Commissioner Karen Suter noted that the company will start mailing the refund checks during the beginning of September.
According to New Jersey law, all auto insurance companies report their profits to the Department in July of each year, with the data then being analyzed to determine if any company earned a profit over what the law permits. The law states that the three-year average profit may not exceed six percent.
Since 1998, five other insurance companies have had to refund more than $50 million to policyholders according to the excess profit law. With Prudential’s refund, the three-year total will exceed more than $75 million.