Allstate to Rebate $110 Million to Californians : Insurance: In the largest settlement under Prop. 103, the 2.9 million refunds will average $66 for auto customers and $25 for homeowners.

In the largest Proposition 103 settlement to date, Allstate Insurance Co. agreed Tuesday to rebate $110 million to California policyholders under the 1988 insurance rate rollback initiative.

The 2.9 million refund checks, to be mailed within nine months, will average $66 for Allstate auto insurance customers and $25 for homeowner customers.

The settlement--the subject of two years of sporadic negotiations between Allstate and the California Insurance Department--represents less than half the $243.6 million that Insurance Commissioner John Garamendi originally ordered Allstate to pay in October, 1991. The refund comes to 5.3% of the premiums paid by people who held Allstate policies between Nov. 8, 1988, and Nov. 7, 1989.

Harvey Rosenfield, who led the drive for passage of Proposition 103, criticized the rebate as “pitifully small” given Allstate’s size--second-largest property insurer and third-largest auto insurer in the state--and the fact that it is flush with capital after a $2.1-billion initial public stock offering in June.

He and other consumer advocates said the timing was politically motivated, with Garamendi rushing to get money into voters’ pockets before his anticipated face-off with state Treasurer Kathleen Brown for the Democratic nomination for governor. Implementing Proposition 103 was a key issue in Garamendi’s 1989 election campaign; his success in obtaining rebates is likely to be an issue in the battle with Brown.

“The problem is, Garamendi’s judgment about what the public is going to appreciate I think is way off,” Rosenfield said Tuesday. “Five years later, I get a $66 check?”

Allstate Vice President Charles Martin said at a Tuesday morning news conference with Garamendi that the company settled the case in order to “put the issues of the ‘80s behind us.”

But Allstate, which has spent $750,000 fighting Proposition 103 in court, may also have been hedging its bets against the outcome of a Proposition 103 case now before the California Supreme Court. The case, brought by 20th Century Insurance Co., challenges Garamendi’s rebate formula as unconstitutional. After losing in Superior Court, Garamendi appealed to the high court. The department’s outside legal bills are about $2 million, a spokesman said.

Allstate last week filed a brief supporting 20th Century. However, as part of the settlement, it will withdraw the brief and drop other legal proceedings.

The Allstate agreement follows a $40-million settlement last week by Safeco Insurance Group that will result in refunds averaging $111 to about 360,000 policyholders. Garamendi had originally ordered Safeco to pay $110.3 million.

Garamendi, at the news conference at the Insurance Department’s Los Angeles office, said the figures he used to calculate those initial rollback amounts were “dated and inaccurate.”

He acknowledged that Proposition 103, as interpreted by various courts, is so complex that it is “very, very difficult to determine what the law requires.”

He denied critics’ contentions that he is offering bargain settlement deals for political reasons.

Garamendi said he has secured about $725 million in Proposition 103 rebates for nearly 7 million Californians. That total includes about $38 million in interest plus $192 million in dividends paid by the Automobile Club of Southern California and its Northern California affiliate, the California State Automobile Assn.

Allstate’s stock closed at $30 a share Tuesday in trading on the New York Stock Exchange, up 25 cents. Allstate said the settlement will not affect this year’s financial results because virtually all of it is being charged against previous years’ earnings.