With a visit to the dentist becoming increasingly expensive, it’s not surprising that demand for dental plans is growing. According to Laing & Buisson, although there was a slight fall in the numbers covered by capitation schemes, demand for dental insurance schemes increased by 7.3% in 2010.
While corporate schemes have fared particularly well, some insurers are now turning their attention on individuals, with a flurry of activity in this part of the market. The last few months have seen the sale of Denplan to Simplyhealth to strengthen its healthcare proposition; and Bupa’s debut into the consumer dental insurance market with the launch of its Dental Cover 10 and 20 plans.
“We included dental in our Bupa by You medical insurance consumer proposition and we got such high demand for this that we decided to launch it on a standalone basis,” explains Alastair Dornan, head of business development at Bupa.
The plan offers two price points, £9.40 and £13.40. The cheaper of the two, Dental Cover 10, is designed to provide a full refund for NHS treatment while the other plan is more suited to those with a private dentist, allowing them to claim up to £150 a year for routine treatment such as check-ups, x-rays and a scale and polish. With the more expensive plan, individuals can also claim up to 75% of the cost of any additional non-cosmetic treatment, up to a maximum of £700 a year, plus up to £5,000 a year for dental injury and £600 a year for emergency dental treatment. Both plans also include cover for oral cancer.
Although this is a new area for Bupa, other providers are also active in the individual dental insurance market. Simplyhealth has its Simply Dental plan, which was launched in 2006 and costs from £7.50 a month. This allows members to claim back a percentage, either 50% or 75%, of the cost of clinically necessary treatment with check-ups and x-rays fully covered.
“You have to have co-insurance on these schemes,” says Howard Hughes, head of employer marketing at Simplyhealth. “Without this it’s not sustainable.”
WPA has also been in the dental market for many years with its Providental plan which costs from £9.50 a month. Similarly, AXA PPP healthcare has a dental insurance scheme, which it launched last autumn. Like Bupa’s plan it has two levels, Core for NHS patients and Premium for those with a private dentist.
Although the bulk of sales are direct, commission is available on some of these plans. For example while Simplyhealth will pay initial commission of 15% with 5% renewal, Bupa’s plan is only available direct to consumers.
Some of the big brands also knock out dental insurance. For instance Tesco has teamed up with AXA PPP healthcare offer core cover for £9.95 a month for NHS treatment and premium cover at £19.95 a month for private treatment. Boots also offers a dental plan which is underwritten by Great Lakes Reinsurance and starts at £9.75 a month.
But although these high street names are jostling for business, sales of dental insurance schemes do remain low.
Hughes says: “There was a 2.2% growth in numbers in 2010 but there are still only 289,000 people with an individual dental insurance scheme in the UK,” he says. “In the corporate market, dental insurance is proving much more popular but capitation schemes do work well for individuals.”
There are several reasons why capitation schemes have performed so much better in the consumer market than dental insurance. For starters, Hughes says it suits the consumer who regularly visits the dentist.
“If someone visits their dentist on a regular basis a capitation scheme works like a payment plan,” he says. “This means they can budget more effectively for treatment costs.”
Additionally, because these schemes, which are offered by the likes of Denplan and Practice Plan, are commonly sold through dental practices it allows more engagement with the dentist Mike Blake, compliance director at PMI Health Group, says that taking out a dentist’s recommended plan can reinforce the individual’s relationship with the dentist.
“If you join your dentist’s scheme, you’re a member of the practice,” he says. “It helps to build loyalty so you might find, if you have a dental emergency, the dentist would be more willing to see you.”
Dentists are also keen to offer these types of plan. Dr Minesh Talati is a dentist and founder of Malmin Dental Care, which has branches in London and Manchester. While many of his patients are covered through corporate schemes, his practices offer an individual policy at £12.95 a month. This covers dental examinations; two hygienist appointments; worldwide emergency and accident cover; and 15% off any general treatment.
Dr Talati says: “We don’t have any scoring on our plan: everyone pays the same price. It’s very transparent and we find that this encourages people to come for their regular check-ups.”
This model is popular with other dental practices too. For instance Barbican Dental Care also offers an individual scheme giving the core benefit of two check-ups, x-rays and two hygienist appointments a year plus 25% off most other treatment for £18 a month. It also includes worldwide trauma insurance; £2,500 for diagnosis of oral cancer; and redundancy protection.
Room for advisers?
Unfortunately, with dentists cornering the capitation market, there is little room for advisers in the individual dental market. But, for many advisers this isn’t really a hardship.
Blake explains: “An individual dental plan costs £12 to £15 a month so the commission on this is only around £12 a year. We might sell a few each year but it’s not really financially viable to sell dental plans to individuals.”
Hughes agrees. He says that the majority of individual dental schemes sold through advisers are accommodation sales. “Sales will occur but it will require the customer to ask for it rather than the adviser to actively promote it,” he adds. “I don’t blame them. If I was running an adviser business I don’t think I’d do a mailing on dental insurance to my clients.”
Other products can also fill the dental gap more effectively. Some medical insurance policies include dental as an option. This includes Bupa’s Bupa By You, from which its standalone dental plan was launched; WPA’s Flexible Health Insurance; PruHealth, which offers two options, major dental treatment and major and routine dental treatment; and Aviva’s Healthier Solutions, where a combined dental and optical benefit can be added as an extra.
Cash plans can also provide a useful dental benefit. For example, on Westfield Health’s individual plan Good4you, its most popular level of cover costs £16.60 a month and includes up to £105 of annual dental benefit with a further £210 for dental trauma.
But while this may be sufficient to cover the routine work, it’s the range of other benefits that make cash plans a hit with advisers. For instance, Blake says he would be more likely to recommend a cash plan than dental insurance.
“Cash plans offer more value,” he explains. “You can claim for so many other everyday health related items that even if you only used the dental benefit to top up an existing dental insurance scheme it could still be worth taking out.”
Making dental work
Although most advisers don’t get involved with individual dental plans, Glen Smith, managing director of Healthcare Partners, believes it could offer potential. “There isn’t much commission when you sell an individual dental plan but if you can get the distribution model right, you can overcome this,” he says.
He has already built up a good revenue stream from another low ticket product, travel insurance, and believes individual dental plans could be sold in a similar way. “We started selling travel insurance six years ago, focussing on it seriously over the last two to three years. Sales have grown significantly and last week we wrote £200,000 worth of business. By the end of the year we expect to have written more than £10 million of business,” he explains.
Sales are generated online or through a call centre so adviser intervention is kept to a minimum. “It’s a below the horizon sale,” he adds. “If you can get volume you can make it work,” Smith adds.
But, while he sees potential, he does admit it’s not an easy, or cheap, way to do business. “Initial costs are high to develop a transactional website and once this is up and running you do need to spend money marketing it,” he says. “There could be nothing in it for the first year or so but if it sticks, it could be a good long term opportunity.”