A bitter battle has escalated in a half-dozen states over auto insurance rates, with government leaders attempting to mandate lower premiums for drivers, and insurers threatening to cancel policies and stop doing business in the states.

The battle, which involves important constitutional questions and unvarnished political deals, could have important consequences for motorists nationwide. If state leaders' arguments are correct, they could pave the way for sharply lower insurance costs. If the insurers are right, insurance may become more difficult to get for an ever larger number of drivers.

Some companies are already trying to pull out of states that have imposed rate cuts or other unpalatable regulations, and several states have retaliated with laws or regulations that require a company to continue writing auto insurance if it also wants to keep writing health, life, homeowners and other policies..

A number of states have enacted or are considering rollbacks or other rate restrictions, among them Massachusetts, Pennsylvania, New Jersey, South Carolina and Nevada, and battles loom in other states, according to industry experts.

"There's fairly serious warfare going on there" in the states, said Robert Hunter of the National Insurance Consumer Organization in Alexandria.

One of the most vociferous companies is Aetna Life & Casualty Co., which has hired Harvard University constitutional law expert Laurence Tribe to help it challenge Massachusetts laws. Aetna is also pulling out of South Carolina and, until a recent standstill agreement with state officials, had been sending nonrenewal notices to its customers in Pennsylvania.

At issue between insurers and the states are fundamentally different views of the causes of rapidly rising insurance rates. Consumer groups believe that insurers make excessive profit and operate essentially on a cost-plus basis, caring little how much costs rise. The industry argues that rates reflect real cost increases over which they have no control. They point to rising medical and auto repair costs, excessive jury awards and outright fraud.

"In several states ... the emphasis has been too much on heavy regulation and interference in economic decision-making with too little concern about the impact on the profitability and viability of some insurers," said Dave Snyder, counsel to the American Insurance Association, a trade group here.

Proposition 103 in California, which mandated a 20 percent rate rollback, "was the beginning of a lot of this," said Hunter.

"Although they are not pulling out of California, the companies have done everything they can to foul things up," Hunter said, noting that court challenges have delayed or eliminated much of Proposition 103, which voters passed in November 1988. "Put yourself in the insurance companies' position -- you might do the same thing. If they just pay a 20 percent rollback, 49 other states are going to pass one next week."

Today, the noisiest battleground is Pennsylvania, which did just that. The Keystone State recently enacted an auto insurance reform package that offers consumers the option of enrolling in a modified no-fault system. Under this system, the consumer gives up his or her right to sue except under certain circumstances and is compensated for economic losses after an accident by his or her own insurer. The state mandated 10 percent rate rollbacks for motorists who opt to remain in the standard tort system, retaining full rights to sue, and 22 percent cuts for motorists opting for no-fault.

In the state's view, the savings that will be generated over the years by the no-fault system will compensate the companies for the rate cuts. But the companies complain that since the cuts are immediate and the savings come later, many will operate in the red in the meantime. "We are losing money already and this would just aggravate the problem," said John C. Hawkins of Aetna.

After appealing unsuccessfully to the state insurance department for a rate review, Aetna, along with a group of other companies, began sending some 9,000 nonrenewal notices. After renewed talks with state authorities, however, it suspended the action in exchange for an expedited review of its request for a hardship exemption from the rollback.

And the fight rages on other fronts. Under the law, insurers had until May 1 to file schedules of reduced rates, which were to become effective July 1. But by mid-May, half of the 223 companies doing business in Pennsylvania had not filed. The state has filed suit against seven insurers, charging them with conspiring to defeat the law.

Insurers are also suing. Some two dozen, including several units of Chevy Chase-based Geico Corp., have gone to court, charging that the new law will unconstitutionally compel them to lose money. One, Harleysville Mutual Insurance Co., had won a stay of the law, which the state was appealing.

The legal arguments are similar in both Pennsylvania and Massachusetts. The companies contend that the state laws, would compel them to operate at a loss, which would amount to an unconstitutional taking of their property without due process. Under a truce negotiated last week in Pennsylvania, the state has agreed to review hardship petitions from Geico and others, but officials have indicated that they believe many companies are exaggerating their financial peril.

So far, Pennsylvania does not require a company to leave entirely if it drops auto coverage, but Massachusetts and New Jersey do, and both are being challenged.

In Nevada, a 15 percent rollback enacted last year is tied up in federal court, and, according to Hunter, "there is a bill in virtually every legislature."

The Maryland legislature held hearings last session on auto rates, and Virginia is studying them, but so far neither state nor the District has taken any action.

Cigna Cos. recently abandoned personal auto insurance altogether, and while Aetna, the nation's fifth-largest carrier, insists it is in the market to stay, Hawkins made it clear that it will pull out of any state that gets too tough. "If we operate {in a state where} the environment is hostile and the rules of the game are rigged, we are not going to play the game," Hawkins said.