Allstate Questions Proposed Rebate of $86 Million

Allstate Insurance Co., California’s third-largest auto insurer, today challenged the state insurance commissioner’s finding that it should roll back $86 million to customers.

At the outset of a two-day hearing before an administrative law judge in Los Angeles, Allstate officials claimed that a proposed 11.2% rate of return on the company’s equity is unfair.

The 11.2% figure was reached by Insurance Commissioner Roxani Gillespie after the passage of the auto insurance rate-slashing Proposition 103 by California voters in November.

In her opening remarks at the hearing, Gillespie said the 11.2% rate is the average profit return shown by state insurance companies in the last 15 years.

“A company can be exempt from rollbacks to the degree that if they comply with the rollbacks they will not make a fair rate of return,” Gillespie said.