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

Allstate Insurance Company said it has stoppedselling its Your Choice Auto (YCA) program in California butdisputed a claim by a consumer group that it did so because ofpending action by the state's insurance department.

In a statement, the consumer group, ConsumerWatchdog, said Allstate agreed to stop selling the YCA policiesrather than face a formal Department of Insurance hearing into thelegality of the program requested by the consumer group.

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

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

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

The YCA product, according to Consumer Watchdogand confirmed by Allstate's Mr. Mellander, is a product offered tocustomers that charges a higher premium—Mr. Mellander said thepercentage varies depending on the risk—in exchange for a promisethat future tickets or accidents would not be used as a reason toincrease premiums.

Mr. Mellander said the department approved theproduct in 2008 and that the insurer continues to offer it in otherstates.

He said Allstate stopped offering the productto new customers on Jan. 1 and that the company will begin totransfer other customers who have already opted for YCA policiesback to the company's standard protection package as renewals comeup.

He stated that the decision to move away fromYCA products in California is part of a broader strategy in thestate. "We think it will better enable us moving forward to offerCalifornia consumers even better, stronger, more competitivelypriced products," Mr. Mellander said.

Consumer Watchdog contended that the YCAprogram violated California's good driver discount law, unfairlydiscriminated against drivers despite their good records andencouraged irresponsible driving. The group also accused Allstateof selling a deceptive product.

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