If Amy Friedrich is right, benefits advisors who see a way to help employers lock in reasonable dental insurance prices through 2028 should do that.
Friedrich warned about the possibility of coming price hikes last week in New York, at a conference for insurance stock investors that was organized by KBW.
Friedrich, the president of Principal Financial’s benefits business, said she’s seen the dental insurance market go through two complete up and down cycles.
She thinks the market is now close to the end of the pleasant side of the third cycle.
If this rate cycle is like the first two, the dental plan renewal market is probably “about six to 12 months away from seeing some increases that drive brokers and advisors to look for other partners to do business with,” Friedrich predicted. “The renewal rights are going to be unsustainable, especially for small to midsize businesses.”
Friedrich said some insurers are eager to expand their group benefits business.
“One of the highest-premium ways you can do that is through dental,” she said. “It’s a nice product. People understand it. They actually ask for it at work.”
But a big, growing dental insurance business needs fraud-fighting programs and other tools it can use to control costs, Friedrich said.
Without those tools, an insurer that wants to keep its dental block profitable will have to charge ugly prices, she said.
“They might optimize claims a little differently,” Friedrich said. “That’s not necessarily problematic, but it means that there’s always a period where we’re making sure we’re keeping up with all those underlying changes.”
Detecting and respond to claim fraud is essential, but a dental insurance provider that wants to keep prices down and stay profitable also has to be able to detect and respond to other kinds of trends that may increase claim costs, she said.
Another KBW conference speaker, Michel Khalaf, the chief executive officer of MetLife, said his company has already increased group dental prices.
MetLife began the year estimating that its premium revenue would grow 4% to 7%.
The company is now saying premium growth may be toward the lower end of that range, partly because it raised dental insurance rates in January.
“That had an impact on persistency for dental and for some of the products that we tend to bundle dental with,” Khalaf said. “Just to be clear: We are perfectly willing to let business move away if we can’t clear our return hurdles for that business.”
MetLife believes most rate increases are now behind it and that the company’s ability to retain business will be strong, Khalaf said.