Commercial insurance prices remained flat for the eighth consecutive quarter, according to Towers Watson's most recent Commercial Lines Insurance Pricing Survey (CLIPS).

At the same time, accident-year loss ratios deteriorated relative to the same period in the prior 12 months.

More specifically, the study found that commercial insurance prices fell by 1 percent during the fourth quarter of 2010. The survey compares prices charged on policies underwritten during the fourth quarter of 2010 to the prices charged for the same coverage during the same quarter in 2009.

Drilling further down, while pricing for the majority of lines remained flat, commercial property, professional liability, directors and officers liability, and employment practices liability lines showed price reductions for the fifth consecutive quarter.

Of course, the price trends differ by account size. Small and mid-market accounts, showed flat pricing trends while prices fell in large accounts and specialty lines.

The survey also found that accident 2010 loss ratios increased 5 percent relative to the same period in 2009. This deterioration is higher than the estimated deterioration of 2 percent for accident year 2009 compared to 2008.

Towers Watson says the relatively modest price declines experienced in 2010 on an earned basis are compounded by higher reported claim cost inflation indications than those for 2009. The survey found 2010 claim cost inflation of about 4 percent, consistent with long-term averages.

"The slightly negative 2009 claim cost inflation indicated in our survey is the lowest we've observed in the history of the survey," said Bruce Fell, director of Towers Watson's Property & Casualty practice in the Americas. "The recession appears to have had a very significant dampening effect on losses during 2009, which likely reduced pricing pressures in calendar 2010. Our survey results for 2010 support the contention that the economic recovery will be accompanied by higher cost trends, and those estimates could increase if additional 'catch-up' from 2009 negative trends - beyond a return to long-term averages - would occur with rebounding economic conditions."

For the survey, data were contributed by 38 participating insurance companies representing about 20 percent of the commercial insurance market (excluding state workers compensation funds).