SAN FRANCISCO, CA — As Allstate Insurance sees it, good corporate citizenship should be rewarded.

So for the benefit of investing $82 million in low-income homes
and other programs in inner cities and rural communities in the past
decade, the Illinois-based insurer wants its 1 million homeowner
policyholders in California to pay higher premiums.

That’s a key argument Allstate officials made to insurance
regulators Monday as they sought approval for a 9.3 percent rate boost,
or an average increase of $79 a year for each customer.

"No matter which way you cut the data, Allstate always floats
to the top. We were above the average investment (for other homeowners
insurers)," Allstate actuary Steven Armstrong said during a hearing
before an administrative law judge at the Department of Insurance’s
offices in downtown San Francisco.

Allstate officials did not offer specifics on where the company invested its funds.

Consumer advocates have challenged Allstate’s proposal and urged
regulators to slash premiums by 30 percent, saving policyholders an
average of $326 a year on their annual bills. Critics argue the insurer
is flush with money, earning $5 billion in profits in 2006 and buying
back $3 billion worth of company stock during the first nine months of
2007.

Allstate, the state’s No. 3 homeowner insurer, is bucking moves
by its major competitors in California. Market leader State Farm Mutual
Automobile Insurance Co. has cut rates by 20 percent, and No. 2 Farmers
Insurance Group has reduced its rates by 18 percent.

The companies attributed the cuts to a drop in the number of claims and insurance payouts.

Allstate has come under fire from Insurance Commissioner Steve
Poizner, who last year questioned if the carrier was charging its
customers too much. In an unprecedented move, the commissioner
threatened to seek refunds if he finds the carrier’s premiums are
excessive.

The review will come after Poizner acts on the rate increase proposal later this spring.

In recent years, critics have chided Allstate for its treatment
of customers in hurricane-prone areas and accused the company of
boosting profits and reserves by abandoning higher-risk markets.

Last July, Allstate stopped issuing new homeowner policies in
California because of potential costly payouts from natural disasters.
The company has made similar moves in hurricane-prone states on the
Atlantic and Gulf coasts.

On Monday, regulators focused on Allstate’s request to raise
future premiums. The issue boils down to a numbers game — whether the
company’s team of lawyers and actuaries can convince the state its
financial calculations justify the higher prices.

Allstate officials argued the company should be able to profit
from investing in communities often overlooked by traditional
investors. Regulators offer some incentives to insurers to encourage
investments in underserved communities.

From 1997 to 2004, Allstate said it ranked second among home
insurers with $82.5 million in investments. That represents almost 30
percent of the amount all homeowner insurers invested in underserved
communities during that period.

But Pamela Pressley, an attorney for the Foundation for
Taxpayer and Consumer Rights, said the carrier’s analysis is flawed.
She said Allstate invested only $15 million during the final three
years of the survey period. Customers, she said, shouldn’t be asked to
pay for the company’s goodwill.

Moreover, Pressley said, "they already are getting some return on investment."

Allstate said raising yearly premiums from $848 to $927 would
provide a financial buffer against risks, especially from huge payouts
triggered from wildfires and earthquakes.

"If approved, this rate filing will ensure Allstate remains in
an improved position to deal with the volatility of natural disasters
in the California homeowners insurance market," Allstate field vice
president Robert H. Barge III
said in a statement Monday.