From the Dow Jones newswire today:

Some financial advisors who sold long-term care insurance to clients may have some explaining to do.

For the first time, Genworth Financial Inc. (GNW), the largest provider of individual long-term care insurance, or LTCI, has said it will raise premiums for existing customers. Genworth, which said previously that it projected premiums would remain static for life, filed in all 50 states last month for premium increases of 8% to 12% on most of its policies..

The reasons for rising rates at Genworth, and possibly other players, are tantamount.  One major factor is that long-term bond rates are historically low lately, and this is where insurance companies park a lot of the money they hold in reserve.  Ultra-conservative bond yields being low means rates may have to go up industry wide.  As agents, we remind our clients that rates can and may go up in the future, but Long-Term Care Insurance is still a necessary thing.

Genworth has applied to raise premiums for a majority of the policies it sold before 1997, when Genworth was a unit of General Electric Co. (GE). The company expects the increases to begin taking effect in October, though the process will likely take much longer in some states.

Genworth Financial’s policies are a common choice for many advisors and their clients. The company’s other business lines include life, disability and mortgage insurance, annuities and asset management.

According Buck Stinson , president of Genworth’s long-term care division, the company’s actuaries had historically overestimated “voluntary lapse rates,” or the number of policyholders who would stop paying for coverage before ever claiming benefits.

Let’s go ahead and assume that premiums will rise.  They almost have to.  One industry actuary, who would not comment publicly for a story mentioning news from a specific company, cautions that pricing methods still remain far from perfect.

Women, for example, claim benefits far more often and also far longer than men. “And yet we use unisex pricing,” the actuary says, leaving insurers vulnerable to more premium increases in the future.