NU Online News Service, Jan. 12, 2:17 p.m. EST

Allstate Insurance Company said it has stopped selling its Your Choice Auto (YCA) program in California but disputed a claim by a consumer group that it did so because of pending action by the state's insurance department.

In a statement, the consumer group, Consumer Watchdog, said Allstate agreed to stop selling the YCA policies rather than face a formal Department of Insurance hearing into the legality of the program requested by the consumer group.

"Once compelled to produce the requested documents, which allowed Consumer Watchdog and its experts to further probe the legality of YCA, Allstate soon requested that the matter be resolved before trial," the group's statement said.

But Bill Mellander, a spokesman for Allstate in San Diego, said Consumer Watchdog's statement is "nothing more than a created work of fiction," adding that the decision to stop selling YCA policies was a business decision by the insurer.

Ioannis Kazanis, press secretary for the California Insurance Department, said the department had no pending hearing regarding the product. "It is what Allstate said," Mr. Kazanis said. "It was a business decision."

The YCA product, according to Consumer Watchdog and confirmed by Allstate's Mr. Mellander, is a product offered to customers that charges a higher premium—Mr. Mellander said the percentage varies depending on the risk—in exchange for a promise that future tickets or accidents would not be used as a reason to increase premiums.

Mr. Mellander said the department approved the product in 2008 and that the insurer continues to offer it in other states.

He said Allstate stopped offering the product to new customers on Jan. 1 and that the company will begin to transfer other customers who have already opted for YCA policies back to the company's standard protection package as renewals come up.

He stated that the decision to move away from YCA products in California is part of a broader strategy in the state. "We think it will better enable us moving forward to offer California consumers even better, stronger, more competitively priced products," Mr. Mellander said.

Consumer Watchdog contended that the YCA program violated California's good driver discount law, unfairly discriminated against drivers despite their good records and encouraged irresponsible driving. The group also accused Allstate of selling a deceptive product.

"Your Choice Auto became a cash cow for Allstate by charging customers more than they should be paying under California's good driver law," said Todd M. Foreman, in-house counsel for Consumer Watchdog. "Only when faced with the threat of having their executives cross-examined about the actual costs and benefits of YCA did Allstate finally agree to take this product off the market."