The California Supreme Court has upheld most of Proposition 103, a landmark law that places new controls on insurance companies, but insurance rates may not decline soon.

The surprising unanimous ruling Thursday has some important long-term consequences for the California insurance industry and its millions of customers, who now have laws to guard against geographic discrimination, policy non-renewals and uncontrolled rate increases.But for the short term, rates for car, property and liability insurance appear to be in the hands of the state's newly powerful insurance commissioner, Roxani Gillespie.

An appointee of Gov. George Deukmejian, she is - like many of her predecessors - a former insurance executive. Proposition 103 strengthens the office and seeks to sever its ties with the industry by making it an elective position, starting next year.

Proposition 103, approved by voters in November, was supposed to roll back insurance rates 20 percent below November 1987 levels and freeze them until this November, unless an insurer could show a "substantial threat of insolvency."

But in the one important aspect of Thursday's ruling that favored insurers, the court said the threat-of-insolvency standard was too narrow and failed to guarantee a "fair rate of return," the constitutional requirement established by the court in rent-control cases.

Rejecting arguments that the freeze was justified as a temporary measure to compensate for uncontrolled rate increases, Justice Allen Broussard said:

"The asserted rise in insurance rates . . . is a long-term, chronic situation which will not be solved by compelling insurers to sell at less than a fair return for a year."