In early August, Genworth Financial announced that regulators in 22 states had approved a quarterly weighted average rate increase of 58 percent for some of its long-term-care insurance policies. Unfortunately, while that sounds like a lot, such LTC price hikes have become the norm in the industry in recent years.

In fact, Genworth, which has the nation's most LTC insurance policyholders, had already raised premiums by 28 percent in each of the past two years—and other LTC insurance carriers have applied for similar increases.

While rising costs have become the norm, the fact that they continue to plague this industry raises questions of when will it end. Will LTC prices ever stabilize? And why, after all these years, can't LTC insurance get its act together?

The usual explanation given for these price jumps is that the market is still immature. In its early years, lack of adequate data about claims usage led to inaccurate actuarial assumptions. In other words, from the beginning, LTC insurance policies were underpriced.

"The actuarial assumptions missed their targets," said Murray Gordon, CEO and founder of Riverwoods, Ill.-based MAGA Ltd., an LTC insurance planning specialist and consulting firm launched back in 1975. "Why did this happen? When these products were developed, there was not a lot of statistics available to properly determine future claims utilization."

The industry has been playing catch-up ever since.

"Genworth has lost $2.9 billion cumulatively in our long-term-care insurance business on our older policies, due to higher than expected claims costs," acknowledged Genworth spokesperson Julie Westermann. "This is an issue that has affected the entire LTC insurance industry. Meanwhile, Genworth continues to lose money on these older policies each year—losses we will never recover."

But there are other factors affecting costs. Customers are living longer and filing more costly claims than originally expected, especially as health-care costs rise. Moreover, low-interest rates have adversely impacted carriers' earnings on reserves.

"Rate increases that were implemented over the last five years were necessary to pay future claim obligations," Gordon explained. "In addition, major carriers have had to infuse more reserve dollars since rate increases were not adequate."

Evidently, state regulators are sympathetic. The approvals of increases "reflect that state insurance regulators understand the need," said Westermann.

There's no denying the market has been hard hit. The potential liabilities have grown so onerous that John Hancock quit writing new LTC policies last year, and Prudential did a similar about-face in 2012. In 2017, the number of traditional LTC policies sold amounted to just 10 percent of those 20 years earlier.

"One would think that the increase in medical costs is a factor, but it is not," said Lewis Walker, a wealth advisor at Capital Insight Group in Peachtree Corners, Ga. "LTC contract obligations are a fixed benefit with a specific pool of dollars available."

In reaction to rate increases, Walker said, policyholders may scale back coverage or even drop their policies altogether, putting additional pressure on insurers' bottom line. "That trend is accelerating," he said.

Having fewer premium payers to support existing benefits obligations makes for an unsustainable business model. "That's a major squeeze for a Genworth, one of the earlier carriers to offer benefits," said Walker.

But, according to Westermann, fully 78 percent of Genworth's policyholders "elect to pay the rate increase rather than reduce their coverage."

Still, Walker insisted that rate hikes are "scaring off both new applicants and advisors who are dealing with the complaints of clients. We are recommending traditional LTC less and less, finding hybrid policies more attractive."

"Hybrid policies" refers to those that link LTC benefits to life insurance or other products. Clients seem to like such products for the promise of a guaranteed payout one way or another, unlike a traditional standalone LTC plan, which only rewards policyholders if and when they require LTC help.

With fewer dollars flowing into traditional LTC coverage, and more dollars coming out than anticipated, Walker is pessimistic about the industry's future. "I do not expect increased stability," he cautioned. "In fact, the traditional LTC model is headed for ultimate destruction."

But Gordon at MAGA is more optimistic. "Current actuarial assumptions have now taken those [past] missteps into account, especially underwriting and investment yield," he said. "If there are future rate increases, they should be minimal."

Indeed, Genworth is working with state regulators to adopt a new pricing model, similar to home, auto and health policies. If approved, it would "revitalize the industry and result in more predictability and manageability," said Westermann.