Allstate Is Target of Quake Claims Fraud Probe

Federal authorities are looking into allegations that giant Allstate Insurance Co. systematically falsified engineering reports to minimize claims it paid after the Northridge earthquake in 1994, officials told The Times on Friday.

Allstate, based in Northbrook, Ill., confirmed the investigation and said FBI agents last week searched its Santa Fe Springs office--where Allstate had set up its earthquake response center--as part of the probe.

Allstate denies any wrongdoing and said it’s cooperating fully with the FBI and the U.S. attorney’s office in Los Angeles.

Sources familiar with the case said the allegations are similar to those made last year in a civil lawsuit that was brought by a former 25-year Allstate employee and the Proposition 103 Enforcement Project, a consumer group.

That suit, which is still pending, accuses Allstate of altering engineers’ reports and falsifying information to reduce claims payments. Civil actions also have been brought against other insurers for alleged underpayment of earthquake claims, but sources said Allstate so far is the lone target of the federal investigation.