It's time to implement the changes required by proposition 103.

FOR more than 17 years drivers across Los Angeles have been asking the question: Didn't we make it illegal to base insurance premiums on where we live instead of how we drive?

And, indeed, we did. In 1988, voters passed Proposition 103, which dramatically altered California's insurance landscape by regulating the industry (saving Californians over $23 billion, according to one national study); requiting refunds for excessive premiums in the late 1980s (rebating $1.2 billion to policyholders); and requiring auto insurers to place more emphasis on motorists' driving safety records than on their ZIP codes for determining policyholder premiums.

That last provision is the one section of the 1988 reforms that had not been enforced--until now. On July 14, the Schwarzenegger administration gave the final OK to rules developed by Insurance Commissioner John Garamendi that, nearly two decades later, implement Prop 103's prohibition on ZIP code-based rates.

This marks a huge victory for good drivers in California and is particularly good for Los Angeles, where motorists with pristine records have long been targeted with the highest premiums in the state. These new rules replace a loophole-ridden regulation put in place by disgraced former commissioner Chuck Quackenbush that has allowed insurers to focus on ZIP codes and even a driver's marital status more than safety record.

Some insurers will resist these reforms. They will claim that, regardless of what voters said in 1988, a driver's home address is more important than her driving record for calculating premiums. But that argument is unconvincing. As J. Robert Hunter, an actuary and former Texas Insurance Commissioner, points out, insurers' own data expose "remarkable inconsistency and irrational results (that) contradict any claim that territory is the best predictor of the risk of loss. It may be a better predictor of where the insurer wishes to market its product, but that makes territory a marketing factor."

The insurers' marketing strategy particularly hurts Angelenos. An official rate comparison of 52 insurers shows that under the Quackenbush system companies charge a good driver from Mar Vista 49 percent more on average for a basic liability-only policy (with no theft or collision coverage) than the same driver would be charged if he lived in Thousand Oaks. A perfect driver from South Central pays 95 percent more than one living in the City of Riverside. Incredibly, a Riverside or Thousand Oaks driver deemed "at-fault" in a recent accident still pays $430 less than the accident-free motorist from South Central for a bare bones policy.

As Commissioner Garamendi's Proposition 103 rules are phased in over the next two years, these out-of-proportion but common scenarios will dissipate, making California's auto insurance rates far more rational. And that means millions of dollars in savings for good drivers. Earlier this month Auto Club of Southern California became the first insurer to present a plan to reform its pricing structure and announced that it would be lowering rates across the board by seven percent, Eighty-eight percent of the Auto Club's customers will receive an average $134 annual savings. Not surprisingly, Los Angeles residents with clean records will earn even greater savings as the company shifts away from ZIP code pricing.

Over the course of the next few weeks, other insurers will be rewriting their rate system in order to ensure that drivers' records, their annual mileage and the numbers of years they have been licensed count for more than other factors, such as the address where they garage their car.

For decades insurers have fought to block the voters' decision about ZIP code-based rates. And in recent months some Companies issued a nasty and deceptive campaign against Commissioner Garamendi and the new rules. Now that the regulations are final we can hope that insurers will adjust their pricing to reflect California law rather than continue to stonewall reform.

In fact, with 2004 and 2005 proving to have been the most profitable years for California auto insurers in a generation, any industry defiance of the roles should be viewed with contempt by customers. With companies reporting auto insurance profits over $2 billion in the California market, and with their claim payouts falling markedly in recent years, most insurers are well-positioned to follow Auto Club's lead and both reform and reduce their rates across the board.

The only question that remains is whether insurers will merge onto the road of reform or park themselves in the mud of resistance.

Douglas Heller is executive director of the Foundation for Taxpayer and Consumer Rights, a Santa Monica-based advocacy group.