The insurer agreed to a separate $1.2 million penalty after an examination identified rating errors, improper cancellations and deficient customer notices.
NEW JERSEY – A state examination has resulted in more than $10.5 million in refunds and credits for New Jersey auto insurance customers, and GEICO and affiliated insurers agreed to a separate $1.2 million state penalty, the Department of Banking and Insurance announced Oct. 20.
The enforcement action followed a market conduct examination launched in September 2024 after consumer complaints. Regulators said improper practices affected more than 15,000 policyholders across five GEICO companies.
The examination found problems with premiums charged above approved rates, midterm policy cancellations, notices that could lead to nonrenewal, and disclosures to customers who kept vehicles after total-loss settlements. GEICO began issuing refunds while the examination was underway.
The premium refunds and administrative penalty serve different purposes. Refunds or credits go to affected customers; the consent order directs the penalty payment to the state.
How the overcharges occurred
The examination report describes errors that moved customers between GEICO affiliates or placed them in more expensive rating categories.
One review identified 4,662 erroneous transfers connected to the handling of accident forgiveness. The report attributed approximately $6.74 million in refunds and credits to those findings.
A separate review found that errors in the insurer’s rate-capping system required approximately $2.08 million in refunds for 9,714 policies. Rate-capping factors had been applied incorrectly during a transition to a new rating plan and subsequent system corrections.
The report distinguishes targeted reviews prompted by complaints from random samples. Its findings should not be read as a conclusion that every GEICO policy was incorrectly priced.
In responses documented by examiners, GEICO acknowledged underwriting execution errors while saying it had not understood the scope and complexity of the systemic problems identified during the examination.
What the settlement requires
Under Consent Order E26-103, GEICO waived a hearing and agreed to the $1.2 million sanction. The order adopts the examination report and requires compliance with its recommendations and New Jersey insurance law.
The department may conduct another examination within 12 months to assess compliance. GEICO must also continue monitoring its underwriting, termination and claims operations for additional instances of noncompliance.
The order covers Government Employees Insurance Co., GEICO Secure Insurance Co., GEICO Choice Insurance Co., GEICO Indemnity Co. and GEICO Casualty Co.
In a statement reported by News 12, GEICO said it was pleased to have resolved the matter and had taken steps to address the department’s recommendations.
“GEICO has already taken steps to address the department’s recommendations,” the company said.
The department’s notice to affected policyholders says letters were sent directly to customers whose policies were affected by an improper rate adjustment. Those policies were adjusted, with either a credit applied or a premium refund issued.
“Consumer protection is at the heart of our mission here at the Department of Banking and Insurance, and we will continue to work aggressively to end bad business practices that are harming New Jersey consumers,” said Acting Commissioner Susan Ochs. “This penalty settlement and the corresponding refunds to policyholders demonstrate our commitment to fostering the trusted, accountable, healthy marketplace that will best serve New Jerseyans.”
Customers reviewing the announcement should check their own letter and policy records. The notice concerns identified billing errors and completed adjustments; it does not announce a general payment available to every GEICO policyholder.