P&CNJmedium
Under N.J.S.A. 17:29A-5.6, if a private passenger auto insurer's actual profits exceed the statutory threshold over the measurement period, the insurer is generally required to:
APay the excess as a fine to the State General Fund
Return the excess profits to policyholders by refund, premium credit, or rate-reduction-equivalent improvement
CDonate the excess to the NJ FAIR Plan
DDistribute the excess as bonuses to the insurer's executives and shareholders rather than returning it to policyholders as required by statute
Why this is the answer
N.J.S.A. 17:29A-5.6 is NJ's excess profits statute for private passenger auto. When an insurer's measured profits exceed the statutory benchmark, the excess must be returned to policyholders — by refund, premium credit, or an equivalent prospective rate-reduction improvement. The excess does not flow to the State General Fund, the FAIR Plan, or insurer executives.
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