Moody's reports its rated commercial lines insurers areindicating a reduced appetite for risk.

According to a survey by the rating agency, insurers “continueto indicate a moderate decline in risk appetite for 2013 for thecommercial liability lines despite improving combinedratios.”

Moody's concludes rate increases will continue in 2014 but thesize of the increases are expected to “slowly taper off” givenplentiful capacity in the marketplace, and as companies improvereturns on capital.

Rates in commercial property, for instance—after three years ofrate increases—are slowing.

The lack of risk appetite in workers compensation isn't asmarked as the early part of the decade, says Moody's, but there isa moderate decline.

Profit in the four major commercial liability lines—workers'compensation, general liability, professional liability and auto—isexpected to significantly improve in accident-year 2013 and 2014 ifrate and loss trends continue and exposure growth becomevisible.

Commercial liability lines insurers see rate increases of about7.5 percent in 2013—up from an increase of 6.5 percent in 2012 and2.5 percent in 2011.

The rating agency can see a combined ratio of 101 in AY 2013 anda profitable 96.5 in AY 2013 after combined ratios of 105.5 and108.5 in AY 2012 and 2011, respectively.