Mortgage insurer QBE Lenders Mortgage Insurance has written to its customers advising them that premium rates will rise on August 29. Lenders will pay as much as 20 per cent more for cover.QBE LMI premium prices will rise 20 per cent for loans with loan to valuation ratios between 88 and 95 per cent, and four per cent for loans with LVRs between 80 and 88 per cent.Genworth Financial has also increased premium rates.QBE LMI chief executive Ian Graham said the group's costs had gone up as a result of a higher loss ratio, more expensive reinsurance premiums and lower investment returns.Graham said: "We don't change pricing on an annual basis. We would expect to hold our prices for a two or three year period."The loss ratio (losses plus provisions as a percentage of earned premium) has gone from below 20 per cent before the global financial crisis to around 50 per cent.Graham said: "Given the part of the cycle we are in, that is a good performance.  In the late 1980s and early '90s the loss ratio got close to 100 per cent. "What makes this cycle a bit different is that the Reserve Bank has been pre-emptive with rate cuts. Rate cuts usually follow the onset of recession. Those pre-emptive cuts have put us in a much better position."Last month Standard & Poor's issued a research note on QBE LMI. The insurer's rating was affirmed at AA- and the outlook was revised from negative to stable.S&P said: "QBE LMI's strong operating performance combined with sizeable resources (capital and reserving) place it in a sound position to absorb higher claims that could arise due to economic pressures, such as increased unemployment and declining property values."Also supporting the outlook revision is QBE LMI's success to date in managing integration risks under its ownership by QBE Insurance Group."QBE LMI has been able to replicate necessary risk models used to underwrite business, retain most senior management and key staff, and maintain strong relationships with existing customers."QBE LMI has also benefited from access to QBE's actuarial, risk and investment management resources, which has improved processes and expense management."Graham said he thought underwriting standards were right and current settings were not likely to change in the medium term.In September last year QBE LMI and Genworth started making a series of changes. They cut the maximum LVR they would underwrite from 100 to 95 per cent, imposed stricter documentation requirements for self-certified borrowers and introduced a requirement for deposits to be made up of "genuine savings".Graham said: "Some of the banks decided they would only lend up to 90 per cent. We did not lead that change."Our standards have stood up well.  We are not like the US or the UK, where standards went out the window. "The changes that have flowed through have not been an overreaction."Out of the 750,000 loans on its books, QBE LMI has 4000 in arrears 60 days or more. That number has been stable throughout the year.