Automobile insurance premiums will drop by as much as 22 percent under legislation passed yesterday by the state legislature and signed by the governor, but an insurance industry representative says the bill could do more harm than good.

The law mandates a general 10 percent rollback in premiums. It also offers an additional 12 percent cut for people who waive the right to sue for pain and suffering in accidents not involving major injury or death.

The rollbacks will go into effect July 1.

Gov. Robert P. Casey signed the bill shortly after the General Assembly overwhelmingly approved it in back-to-back votes.

The House approved the measure 155-42 after more than three hours of debate and despite several attempts to delay action. Shortly afterward, the Senate voted 45-5.

Nora Liero, director of insurance information for the Philadelphia-based Insurance Federation of America, said some insurance companies could be forced into debt or be more selective in writing policies under the legislation's provisions.

"We're concerned that the rate reductions required by this (legislation) are not tied to actual reductions in claim dollars companies may be paying out," Liero said. "It's making it more difficult for companies to continue writing auto insurance -- the rates would be even more inadequate than they are now."

But one local legislator says the bill may not be that bad.

"While the (legislation) is not perfect, I think it's best for the consumer," said state Rep. Ruth Rudy, D-Centre. "The costs are just skyrocketing in Pennsylvania, we have to be doing something about it."

While the law has the no-fault option, people can sue for economic loss and be sued themselves -- for which the companies still would be liable, Liero said.

"When people sue more, the rates in claim dollars are going to go up," she said. "You're taking in less premium dollars but you are still liable for being sued."

In Philadelphia, insurers are currently paying $1.25 in claims for every $1 they bring in, Liero said.

Since 1982, insurance companies have lost over $700 million due to claim expenses pushed up by higher costs in both medical expenses and lawyer fees, she said.

"I can understand the insurance companies and the lawyers being against this; they make their living on tort cases," Rudy said.

The legislation's provisions also include a freeze on rate increases until June 30, 1991, after which any increase must be relative to the consumer price index, Liero said.