Where Does The Time Go and What's Changed?
On 1 July this year I will have been with NZDIS for 15 years or another way to look at it 75 articles for the NZDA News.
At lot has happened in that time.
- Jenny Shipley was Prime Minister and was to lose the election later that year to Helen Clark. In the USA Bill Clinton was President.
- The Official Cash Rate (OCR) had just been introduced by the Reserve Bank and was sitting at 4.50%. In the intervening years it has touched 8.25% and been as low as 2.5%.
- The $NZ was buying US$0.5361 and is currently sitting above 85cents while having touched upper and lower limits of 88cents and 40cents respectively.
- The US stock market (Dow Industrial Average) had just broken through 11,000. It now sits above 16,000 and during the Global Financial Crisis touched a low of 6,600.
Despite all of those political and economic changes NZDIS has been consistent in protecting the dental community. It also occurred to me that during that time nearly 1,000 dentists have graduated from Otago University. My very first article was an introduction of me and also a reminder of who NZDIS is. Some 15 years on and with so many new faces in the community it is probably worthwhile to have a refresher.
NZDIS was established in 1921 by the dental community - there were clearly some very visionary thinkers and men of action in those days. It would seem that the insurance industry of the day did not provide for the potential losses within a dental practice to the satisfaction of these men.
Their solution was to set up their own insurance company - a far easier task in those days compared to the legislative restrictions and Reserve Bank licensing requirements of today. But an insurance company they wanted and an insurance company they established.
The basis for the company is as valid today as it was over 90 years ago. Insurers would not meet the loss of revenue to a dentist that occurred when he or she was unable to practice through injury or accident or sickness.
All insurers to this day (except NZDIS) still require the absent dentist to carry a fair portion of any loss themselves. This is either through the day upon which cover will commence, limiting the cover amount, or recognizing only certain expenditure and / or portion of personal income.
For example, all other insurers require the dentist to have a "Wait Period" on their policies - that is, from the time they are absent (through accident or sickness) they are required to wait a given period before the claim commences. This Wait Period usually ranges from 2 weeks to 13 weeks.
NZDIS still provides cover from the first day of absence provided they are off for at least 5 working days. If the average practice turnover is more than $8,000 per week then this is somewhere between $16,000 and $104,000 that some dentists lose out on before their policy acts.
We don't see too many car or home policies with such high excesses yet many dentists now carry this exposure themselves. Many insurance companies will split the revenue of a practice in to two components - Business Overheads and Profit (or dentist income). Often Business Overheads need to be defined and proven at time of claim while the benefit for personal income is limited to 75% of the amount earned.
The NZDIS policy doesn't differentiate between Business Overheads and Profit. As those clever folk back in 1920's determined all revenue to a dental practice ceases at the time the dentist is absent. The patient fees will either meet Overheads or become Profit. For that reason we set benefit levels on our policies based on Practice Fee Income. A dentist can insure up to 100% of the practice fees if they so desire. We exclude those expenses that would cease in the event of absence - namely consumable and lab fees.
No other policy in the marketplace will fully insure you - again we don't see too many people who under insure their homes or cars but the insurance industry forces you to with your practice revenue. Too often we see people who recognize the value of their material assets but under value what provided those assets and supports their life style - the ability to work. All personal assets are replaceable if you are able to earn - surely then, the most important insurance policy you can hold is disability income - accident and sickness cover.
It may be time to talk with your insurance advisor and see if your policy is truly protecting you.