Allstate Says It Will Sue to Stop Hearings on Prop. 103 Rollbacks

The Allstate group of insurance companies has served notice to Insurance Commissioner Roxani Gillespie that it will sue in an attempt to stop her from holding Proposition 103 rate rollback hearings she has called for next month on Allstate and four other companies.

In a lengthy letter, Allstate’s California attorney, Marc P. Fairman, also said Allstate considers Gillespie’s decision to allow insurance companies only an 11.2% annual rate of return on equity for 1989, and to order that any excess be refunded to customers, to be illegal, because it is allegedly not based on public hearings Gillespie held on the matter.

The letter also indicated that if the courts do not intervene to stop the hearings, Allstate will try to tie them up in lengthy procedural squabbles, a tactic company attorneys followed last September at rollback hearings Gillespie later canceled.

The Allstate moves are consistent with the strategy followed by many companies since Proposition 103 was approved by voters in 1988, trying to tie up implementation of all phases of the landmark initiative in protracted litigation.

A spokeswoman for Gillespie said Thursday the commissioner would not comment on the Allstate letter until she had a chance to study it. However, in announcing her policies on procedures for rate rollbacks and previous approval of new rates last week, Gillespie had predicted further litigation.

Significantly, the Allstate letter said nothing about challenging Gillespie’s ruling last week that would allow the companies up to a 19% rate of return in the setting of new rates for 1990 and later. Lawyers from a number of companies have welcomed that figure, which has been severely criticized by consumer groups.

Gillespie originally pledged to finish making all specific Proposition 103 rate rollback decisions by last Nov. 8. Seven months later, not a single decision has been made.