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Commercial lines carriers may not enjoy the price increases they are anticipating next year, according to a property-casualty insurance analyst.

Bear Stearns analyst David Small wrote in a note to investors today that recent indications portend price increases lower than some managements are currently expecting.

"Our conversations also highlighted that this will be a very late renewal season, with market participants hesitant about binding contracts too early before the market clearing prices have been established," Mr. Small wrote.

Liability lines pricing--making up about three-fourths of commercial lines--appears flat at best, and is generally lower by mid-single digits to low-double digits year over year, Bear Stearns found.

"Property rates appear higher by percentage, in the teens to 20s broadly, with much of the higher increases for hurricane-affected and cat-exposed risks and flat to single-digit increases in non-cat areas," Mr. Small added.

Higher risk-based capital requirements mandated by ratings agencies could also mute property lines profitability.

In certain specialty liability segments, such as directors and officers and errors and omissions, "underwriters appear proactive in offering attractive terms to current clients to avert shopping," Mr. Small wrote, asserting that the economics of winning competitive bids are substantially less attractive than retaining currently profitable business at modest discounts.

Marsh Inc. should benefit from the fact that broker shopping appears on the decline while insurance program shopping has risen, Mr. Small wrote, due the company's size and clout when it comes to negotiating for clients.

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