Premium rates for commercial property and casualty insurance continued to fall in the fourth quarter of 2009, with the 5.6 percent average decline only slightly below the 5.8 percent cut reported for the third quarter, the latest Market Index Survey by the Council of Insurance Agents and Brokers found.

Meanwhile, nearly three-quarters of the brokers responding to the survey said that demand for insurance products did not improve in the fourth quarter–indicating that no end is in sight for weak pricing.

The push for business is even cutting into the surplus lines business, one broker noted.

“Carriers had a tremendous appetite for premium,” the survey respondent said. “Standard markets are snapping up surplus lines type accounts and providing broader terms at cheaper rates.”

The survey indicated that the key reason for the pricing pressure is “ample” capacity as carriers compete for new business.

CIAB officials said that brokers across the country reported very aggressive underwriting by carriers.

“Risk selection as well as pricing has deteriorated,” reported a broker from the Southeast, the report said.

A Northeast broker said carriers are “more flexible on terms and conditions” and that “underwriting appetite [is] expanding.” Another said that “terms and pricing are still excellent” and that a “competitive marketplace is driving the rates down.”

“Tough competition for new business was the name of the game last quarter as carriers chased market share in a still weak economy,” according to CIAB President Ken Crerar.

“Added pressure came from clients putting the squeeze on carriers to get the best terms and rates,” he added. “We don't expect to see pricing turn upward until demand picks up and capacity diminishes.”

Overall, the rates for small and medium business accounts declined slightly less than rates in the third quarter, according to charts prepared by Barclays Capital Equity Research using CIAB survey data.

Even lines that were tougher to place in the first half of the year are getting more competitive, according to the respondents.

“After flattening for much of the second half of 2009, we saw an uptick in competitive pricing during the last quarter, particularly in the casualty lines,” reported one broker.

“Catastrophe-property rates have dropped and terms loosened, significantly,” noted another.

Workers' compensation is “still a competitive marketplace,” said another respondent. “Unfortunately, exposure is down and so are rates, which results in premiums that are a fraction of previous years.”

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