NEW YORK (Bloomberg) — US property and casualty insurance sales dropped for the 12th straight quarter as employers scaled back coverage with the jobless rate near a quarter-century high.

Policy sales fell 1.3 percent to $105.1 billion in the three months ended March 31, the Property Casualty Insurers Association of America said yesterday in a statement. Until the slump began three years ago, quarterly sales had fallen only twice since 1987.

Manufacturers and builders have cut purchases of workers' compensation coverage while individuals pinched by the economic slump have reduced spending, weighing on sales at insurers including American International Group Inc., Travelers Cos. and State Farm Mutual Automobile Insurance Co. The jobless rate was 9.7 percent in each of the first three months of this year, compared with less than nine percent in the same period in 2009.

"The amount of insurance purchased is not coming back very fast," said Bruce Friedberg, chief actuary of Fireman's Fund Insurance Co., an Allianz SE unit, in an interview this month at Bloomberg headquarters in New York. "I don't view workers' compensation as a very kind place to be right now because of the combination of anaemic payroll growth and rates coming down."

Insurers have cut prices to win business in a declining market, adding to the pressure on revenue. US commercial insurance rates fell 5.3 percent in the three months ended March 31 and have declined in every quarter since 2004, according to a survey by the Council for Insurance Agents and Brokers, a Washington-based trade group. "There is basically too much capital in the markets because of the recession and the drop in insured values," said Richard Ward, chief executive officer of Lloyd's of London, in an interview.

"We have too much capacity and rates have fallen."

The housing slump has pressured sales to individuals for residential coverage.

The decline in written premiums "reflects the ongoing consequences of a once-in-a-generation economic storm," PCI president David Sampson said in the statement. "This challenging economic environment reduces demand for insurance."