Some see group dental plans as small fry compared to group private medical insurance (PMI) for large corporate clients. But, while many companies are struggling to maintain their employee benefits programme, dental plans offer the opportunity to provide a low-cost benefit to help boost staff loyalty.
As David Ashdown, the director of corporate communications at Western Provident Association (WPA), says: “If employers can’t afford PMI they can look at dental insurance. It’s low cost to provide, but has a high-perceived value among employees. Most people don’t expect to go into hospital, but they know they will be going to the dentist.”
The benefits are two-fold. Now that it is becoming increasingly difficult for adults to find a National Health Service (NHS) dentist, dental cover gives staff a far greater chance of obtaining treatment. And since even NHS dental treatment is no longer free at point of use – bills usually cost 80 per cent of the cost of treatment up to a maximum of £354 – it also replaces money staff would otherwise have paid directly from their own pockets.
There is also the potential to cut down on some of the 12m working days lost to dental absence every year in the UK. Healthcare analyst Laing & Buisson estimates that nine million people are covered for some sort of dental benefit. It is one of the fastest growing sectors in UK healthcare, with an estimated market value of more than £2.6bn.
So, what are the options for intermediaries looking to move into the dental market?
• Capitation plans provide agreed levels of private dental treatment for individuals in exchange for a fixed monthly fee, which is usually determined by the state of their oral health. Most capitation plans require a patient examination to establish dental fitness, and the contract is between the patient and their dentist. Fees are usually set by dentists to reflect the expected level of treatment, local market conditions and their required profit, although Denplan (market leader in the UK) claims 90 per cent of its patients pay between £11 and £13 a month.
• Indemnity plans are corporate insurance plans that reimburse patients for NHS or private treatment for specific dental benefits, up to defined levels. Indemnity fees are set by insurers, based on benefit levels and claims experience, and can be bought direct or via an intermediary. Independent financial adviser Penny O’Nions, the principal of the Onion Group, says: “Historically, companies have seen PMI as the key loyalty-building benefit, but they are increasingly interested in providing dental and cash benefits.”
• Cash plans offer dental cover as part of a range of healthcare benefits. They reimburse patients for NHS or private treatment up to a maximum cash benefit. Cash plans can be bought by companies or individuals and most are offered by non-profit making organisations. They offer a low-cost option for entry into healthcare benefits, with basic benefits available for as little as £1.10 a week for an individual, up to around £9 a week for family cover.
Raman Sankaran, the marketing communications director for cash plan provider Healthsure, believes the benefits of a cash plan are obvious to customers. “For £1.86 a week,” he says, “an individual can claim up to £70 a year for dental treatment, plus up to £40 a year for children under 18. It gives customers the peace of mind to go to the dentist without worrying about the cost.
“Intermediaries can sell this product into all markets, because while PMI is getting more expensive, companies are still looking to provide benefits for their employees. More and more brokers are finding a market for dental insurance and it offers an easy introduction into companies or a cross-selling opportunity.”
There are also signs that the market is responding to the popularity of cash plans by developing new products. WPA’s recently launched Providental plan specifically caters for dental treatment, with a monthly premium of £9.99 providing benefits of 75 per cent of the cost of treatment up to £250, and no initial examination.
Medicash chief executive Bill Gaywood also believes there are signs that intermediaries and the mutual cashplan providers are finding more common ground. “There has, traditionally, been a suspicion between the non-profit making organisations and intermediaries. But a mutual respect has developed,” he says.
And this growing respect can only lead to more choice for those looking for dental plans – and help change the views of those who consider them of limited potential.