While Allstate is looking for a 12 percent increase inhomeowners rates this fall, a consumer group is seeking to forcerate decreases in the state for the personal lines giant.

Dan Zohar, representing the Foundation for Taxpayer and ConsumerRights, said he will seek a reduction that will save homeowners anestimated $400 million per year.

He noted that all major insurance carriers have been loweringtheir rates in the past year.

"Apparently, Allstate's 'good hands' have been in everyone'swallet and it has been profiting its policyholders excessive ratesfor disaster insurance," he said.

Allstate and the Department of Insurance have been at odds sincethe carrier announced earlier this month it was no longer writingnew homeowners' policies in the state.

California Insurance Commissioner Steve Poizner said the DOIwill seek refunds for Allstate home insurance customers if itdetermines that their current rates are excessive.

This would be the first time in California history that aretroactive refund is ordered following a rate hearing, he noted.Mr. Poizner promised to scrutinize the carrier's rates earlier thismonth after Allstate announced it would not take new business inthe state.

The department has issued a show cause order requiring theNorthbrook, Ill-based carrier to prove that its homeowner rates inthe state are not excessive.

"I am drawing a line in the sand," said Mr. Poizner. "If I findthat Allstate's rates are excessive, refunds will occur. I willtake clear and decisive action to protect consumers."

Mr. Zohar claimed some credit for persuading the commissioner totake this action and said seeking the rate decreases going forwardis only the next logical step in the process.

At the conclusion of the hearing, the commissioner willdetermine the validity of the rates. If they are deemed excessive,the commissioner will order Allstate to reduce its rates anddetermine whether refunds are warranted.

Department spokeswoman Jennifer Kerns said that while theexcessive rate and normal rate hearings will be one and the same,the show cause order will require the company to provide moreextensive data.

California's Proposition 103 prohibits excessive rates anddirects the insurance commissioner to take necessary steps to lowerthem when excessive.

Rich Hallberg, Allstate's California spokesman, said the 12percent rate increase is needed to ensure the company will be in astrong position to help meet the needs of policyholders in the longterm, particularly the cost of special assessments from theCalifornia Earthquake Authority and the cost of reinsurancecontracts.

As for any allegedly excessive past charges, he noted that allrates were approved by the department before implementation.

In the days since Allstate announced it would no longer writenew homeowners policies in California, insurers such as Safeco andFarmers Insurance have said they will expand their presence in theCalifornia market, particularly in the area of homeownersinsurance.