The only insurer to drop its resistance to the Californiainsurance commissioner's directive to limit the use of geographiclocation to set auto policyholders' rates said it did so because ofa good loss experience.

Alice Bisno, vice president of government affairs for theAutomobile Club of Southern California, offered little detail onthe company's decision to break ranks with the state's other autocarriers, who have threatened to fight the regulatory change incourt.

“We can do it and it is in the best interests of our customers,”said Ms. Bisno. She credited policyholders' responsible claims as amajor reason that 88 percent of Automobile Club policyholders areseeing either stable or decreasing policy rates.

Before the new regulations, she said location was “probably thenumber one factor” in determining rates. The company's businessdoes not cover the entire state. The Automobile Club is the state'sfourth largest auto insurer.

The new regulations promulgated by Commissioner John Garamendiare aimed at fulfilling the mandate of Proposition 103, whichrequires rates to be tied directly to driving record, frequency ofuse and number of years driving.

Norman Williams, a spokesman from Mr. Garamendi's office,explained that while a few leading insurance companies havethreatened to sue; it is “difficult to argue that the regulationswill do the harm that they believe.”

Mr. Williams noted that the Automobile Club, in addition torevising its rating factors, was able to give its 1 millioncustomers a 7 percent premium decrease.

This will save customers an average of $134 per year, accordingto the department.

However, noted State Farm Insurance representative Bill Sirola,whose company opposes the regulation, “There is no question thatterritory–where your car is driven and garaged–is a very accurateindicator in the cost to insure.”

State Farm is reviewing all the actions they could take to stallthe “hasty” passage of the proposal, as well as the possibleoptions and outcomes, according to Mr. Sirola.

Insurers have only 30 days to submit new rating plans to Mr.Garamendi's office. They will have two years to implement thechanges, according to his department.

The support of the Automobile Club, amidst all the hostility ofthe rest of the industry, is a “welcome change” which “validates”the commissioner's regulations, said Mr. Williams.