The British have traditionally neglected their teeth, to a degree that would have Donny Osmond and Monica Lewinsky reaching nervously for their dental floss.
As NHS dentists become increasingly scarce, many fear this dental dereliction will only worsen. Going to the dentist is dismal enough without having to sign a cheque at the end of it, and it is estimated that around half the UK’s population does not go regularly. Yet insurers are reporting a steady growth in sales of dental care packages designed to spread out the cost of dental charges and encourage people to take a more active role in maintaining their oral health. This shift should also put a smile on the faces of intermediaries, as some policies provide opportunities for them.
In terms of market size, it is estimated that around one million people are now covered by the capitation dental care policies offered by Denplan, part of PPP healthcare, BUPA and CIGNA, which recently bought Norwich Union’s dental division.
Denplan launched its capitation plan in 1986 and now claims to have 850,000 policy holders, the majority of the market. Millions more are covered through cash plans which pay benefits towards a range of health care costs, and the occasional cash plan specifically for dental costs.
Capitation plans are not insurance. They are schemes offered through dentists, but administered by insurers, where a client pays a monthly sum in return for routine dental care such as check-ups, fillings, preventive care and hygienist work. Cosmetic dentistry, orthodontics and any laboratory work are usually excluded.
When a client joins, the dentist grades their oral health on a scale of one to five and sets their monthly fee accordingly. These typically range between £5 and £15 a month. This may appear a high monthly payment solely for dental work, but Chris Rose, chief press officer for Denplan, says a Mintel report from April 1997 showed 20% of people were prepared to pay £12 a month towards dental cover.
This gives a potential market of seven million patients. She says the number of capitation policies rose by 15-20% over the last year and is set to expand further as people become increasingly accustomed to paying for dental care. Those sceptical about the willingness of the dentally-challenged Brits to pay for a private capitation plan should remember that even if patients can find a dentist willing to treat them on the NHS, they will still have to pay.
Typical NHS costs start at £12 for a large silver filling, £18 for a large white filling, £45 for root treatment, £65 for crown work and £176 for a bridge. A single course of NHS treatment can rise to £330. The patient pays 80% of all these costs.
Mintel research further suggests that the appeal of capitation plans is spreading beyond ABCls, with young adults and skilled manual workers showing increasing interest. Insurers have also seized on research by Towers Perrin, published in October 1996, suggesting that of the new perks employers were introducing for employees, dental care packages were the most popular. And the Association of Industrial Dentists estimate 12 million working days are lost each year through dental problems.
Capitation plans are sold on both individual and corporate basis. The drawback for IFAs on individual plans is that they are sold directly through dentists. Better selling opportunities may lie in the corporate market.
Steve Bell, business manager for CIGNA’s dental policies, says the vast majority of its corporate plans are sold through IFAs. CIGNA’s individual plans are sold on a capitation basis, but its corporate plans are indemnity products, Bell says: “These work more as straightforward insurance contracts with prescribed benefits and limits. The customer can use any dentist, whereas with capitation plans the client is tied to a particular dentist.
“Dental plans often start as a voluntary scheme with the company sponsoring it and negotiating a better discount than an individual could. They then tend to cascade down through senior management into the rest of the workforce, often developing into company paid schemes. These are very early stages but the market is growing. There is business coming through now from major UK employers.” He says atypical corporate voluntary scheme has an annual premium of around £100 per person.
Although Bell acknowledges company perks such as car, pension and PMI have greater appeal, corporate dental care packages will become more popular as NHS cover is harder to find. “It is a relatively low cost perk for a company to offer, but with a higher perceived value because people really use it, unlike PMI where you may only use it every three or four years. People will use dental cover at least twice a year to get their dental check-ups, so they see a quick and regular benefit,”he says.
Bell argues that because dental plans are relatively new, intermediaries have great scope to expand their role in selling this product. “When there is a new benefit on the market that companies know little about, their first instinct is to get somebody who does know what they are talking about, such as their broker. It is not an established market like PMI, where companies know the major insurers and know who to talk to. Brokers have an important role and there is tremendous opportunity for them here.”
Dental plans do not offer massive financial rewards for intermediaries. Premiums are relatively low. CIGNA, which has around 60,000 policy holders, pays 5 per cent commission to intermediaries both on initial sales and renewals.
“Intermediaries often use it as a foot in the door to get other bits of the insurance business. More proactive IFAs see it as a way of giving additional benefits to their clients,” Bell says.
BUPA, which launched its capitation dental plans in 1993, now covers 100,000 clients, says DentalCover national marketing executive, Joanna Dunbar. It launched its new corporate product, DentalChoice Plus, in January. This is available either as a company-paid benefit for three or more employees, on a 50-50 shared payment basis for more than 250 staff and on a voluntary basis for more than 500 staff. Family cover is offered as an additional benefit.
The Classic plan offers £540 routine dental treatment cover, £360 accident and sports injury treatment, £180 worldwide emergency treatment and £10,000 oral cancer treatment. Dunbar says BUPA pays 10 percent commission on initial corporate business with a 5 per cent renewal, through BUPA-recognised brokers.
The other way of planning to meet dental costs are cash plans. Cash plan providers such as market leader Hospital Saving Association include dental benefits among a wide range of other health care payments. Members paying the maximum weekly fee of £12.80 will receive up to £240 dental benefits a year for themselves, their partner and children. A £4.80 weekly payment would supply a maximum of up to £90 annual dental benefit per family member, on top of a further 20 benefits towards various health costs.
WPA has a specific dental insurance plan for routine and emergency treatment. Adult subscriptions range from £1.74 a month for emergency cover to £8.25 a month for its more comprehensive Providental plan.
This plan offers £1,000 towards dental emergencies, £10,000 towards either dental injuries or serious dental problems and £35 annually towards routine treatment. David Ashdown, WPA’s corporate communications director says growing numbers of people are happy to pay for dental plans, but not for the more expensive options. He argues that cash plans are a cheaper alternative to capitation schemes, which can cost some people between £20 and £30 a month.
Ashdown says this is a growing market for IFAs and cash plans in particular are easy to sell to clients, because no medical history is required. Cash plan payments are low but Ashdown says that because WPA pays 35% initial commission with a 5% renewal fee, income can add up. “IFAs are increasing involved. People understand the need for dental cover, they understand the cash plan products and they know they will have to pay something towards their treatment anyway, and are therefore receptive to this product,” he says.
Dental treatment may still score fairly low on people’s health agenda, but this can change when something goes wrong. A recent report in the British Dental Journal
suggested the loss of someone’s teeth can be more traumatic than the death of a close friend. Private dental packages should rise in popularity as NHS dentists become as difficult to track down as the dodo, and people become increasingly accustomed to paying for private treatment. The British may never have the teeth of the Osmond family, but dental care plans are here to stay.