Workers Compensation rates continuing to increase in 2014, but at a slower pace than 2013.

Workers compensation rates are continuing to increase this year, but at a slower rate than 2013, according to an analysis released this week by Moody’s Investors Service Inc.

Rate firming is expected to slow to 5.5% this year, down from 8% in 2013, Moody’s said in Monday’s report. Still, this year’s rate increases are expected to remain “sufficiently above loss-ratio inflation” of about 2%, allowing an underwriting profit for 2014.

“However, our rate surveys suggest a reversal in risk appetite for WC in 2014, with carriers seeking to retain profitable accounts and competing for new business, which will dampen the pace of rate increases,” the report reads.

Moody’s expects that workers comp insurers will have a combined ratio of 98% in 2014 and 96% in 2015 if current industry trends continue, including rate increases and a reduction in taking on unprofitable accounts. That’s compared with a combined ratio of 103% in 2013.

Reserves for workers comp insurers “appear about break-even to modestly deficient for the industry,” Moody’s said. The use of predictive modeling in workers comp could lead to more stable loss reserve estimates in the future as the comp industry accepts such technology on a wider scale, according to the analysis.