By Lavonne Kuykendall

Of DOW JONES NEWSWIRES

CHICAGO (Dow Jones)--Prices for most varieties of commercial insurance continued to drop in the third quarter, with only property insurance showing an increase, driven mostly by companies in earthquake-exposed regions.

A survey of corporate risk managers conducted by researcher Advisen Ltd. for the Risk and Insurance Management Society Inc. found commercial-insurance prices have been steadily dropping for several quarters, with directors-and-officers-liability coverage dropping the most, at 3.9%, while average general-liability premiums dropped by 3.2% from the second quarter this year. Property premiums rose 2.1% on average, with small price cuts in hurricane-exposed areas being balanced out with larger increases in earthquake-exposed regions.

Workers-compensation averages are also falling, though at a slower rate than previously, at 1.5% for the third quarter, driven by reform measures in several states.

David Bradford, editor-in-chief at Advisen, said an abundance of available capital in the insurance industry is driving the falling prices, a situation he said is likely to continue unless big losses in the form of a hurricane or other major catastrophe turn the market.

"Even hurricane-exposed regions are starting to get some relief" in insurance prices for property coverages, said Bradford in an interview. He said the overall uptick in the average property premium was driven almost entirely by rising West Coast prices.

Bradford doesn't see the subprime-mortgage loan crisis leading to an upswing in directors-and-officers insurance prices in the near future.

He said shareholder or other lawsuits were most likely against lenders or real estate investment trusts, and would likely be "painful, but probably not enough to really change things," except potentially in categories that see the most lawsuits.

-By Lavonne Kuykendall, Dow Jones Newswires; 312-750 4141; lavonne.kuykendall@dowjones.com

(END) Dow Jones Newswires

10-02-07 1732ET