In focus: Dental cover

HSA, which resorted to altering the structure and raising the price of its individual indemnity insurance plan last November, refers to “steady growth” but acknowledges that “claims are definitely increasing at least in line with sales” while its sister company HealthSure, which launched a separate individual indemnity insurance plan in April 2007, has already ceased to offer it.

HealthSure reports that the withdrawal of the product is all part of the transition which will see both HSA and HealthSure products rebranded under the banner of their parent Simplyhealth Group later this year. Yet, strangely, HealthSure is unable to provide details of the timing of the product withdrawal, saying only that “there is no definite month or date to give, the plan has just been gradually phased out in the transition to become Simplyhealth.”

Tesco Personal Finance, which launched two direct selling dental products in August 2007, is proud to report that it attracted over 60,000 customers in its first full year of business. Until pressed on the subject, however, it conveniently forgets to mention that it has both increased its prices and tightened its cover during the last year.

The more established indemnity players certainly do not inspire any more confidence.

Universal Provident, although citing internal restructuring as mitigating circumstances, admits that it “hasn’t been writing a great deal of new business.” WPA has “not much to report” and Boots, which only deals direct, “can’t give any indication of how the dental product is doing.”

The only hint of positivity in the indemnity insurance area comes from Dencover, which entered the individual market in April 2006. It reports a 100% sales increase over the last eight months, albeit from a small base. But the company admits that it is doing “virtually nothing through intermediaries” on the individual side. This contrasts noticeably with its group dental insurance operation, which conducts around 80% of its business via intermediaries.

It will certainly be interesting to see whether Dencover, which cites the unusual simplicity of its product as being a critical success factor, is able to continue to buck the trend in the individual indemnity insurance market on a sustained basis because there are no shortage of commentators who suggest that the task is well nigh impossible.

Quentin Skinner, chairman of DPAS, which provides capitation, maintenance and membership plans, says: “For 20 years we’ve been suggesting that trying to apply indemnity insurance against the risk of the expected will always be a disaster in the individual market as you will always have adverse selection. Covering the likely as opposed to the unexpected is inevitably doomed to failure.

“The anecdotal feedback I’ve had bears out that the newer indemnity insurance providers start losing significant amounts of money after the first year. The first year is normally OK but as soon as people start claiming it all goes pear shaped. I’ve had two decades of experience of seeing the complete stupidity of providers trying to offer indemnity-type schemes, from supermarket brands to private medical insurance providers, but dental insurance only works when it applies to the risk of the unexpected.”

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