Putting the Dentist in the Chair

This isn’t a trick question: What do the automotive industry and the dental industry have in common?

Of course, the answer is “nothing.”

Except when you talk with auto industry veterans Adam Marburger and Max Zanan.

The two F&I agency executives have not only found a link between taking care of teeth and taking care of cars. They say they’ve also opened up a lucrative new revenue stream for their F&I peers that they say could eliminate the constant threat of a lost dealer-client breaking one’s bank.

Say what?

The story of this unlikely link goes like this: Zanan, a serial automotive entrepreneur known for writing industry guidebooks, went out to dinner five years ago with a couple who are both dentists.

As the small dinner party got to know each other better, the couple learned that Zanan establishes “tax shelters masquerading as warranties for car dealers,” he told an audience convened at Bobit’s recent Agent Summit to hear what dentistry and car sales suddenly have to do with each other. Zanan and Marburger tag-teamed to explain.

Zanan’s curiosity was piqued during a conversation with the dentists about how a dental practice operates, and he asked them what would happen if he got a tooth crown that broke two years later – would a warranty cover that?

“They said there is no concept of warranties in dentistry,” Zanan said. “What they do in reality is if something goes wrong in the first 12 months, they will redo it for free – they good-will it.”

To Zanan, who made a living in part by connecting auto dealers with reinsurance coverage, that seemed like lost opportunity, so his mind started to work around the possibility that the same mechanism could be applied to dental practices. The more he learned about that industry, the more he saw his instinct was right.

Tooth Gap

The lost revenue from redone crowns and other dental services met with gaping needs in the sector that most people outside of it have no awareness of.

For one, most newly minted dentists leave dental school burdened with overly heavy college debt, then find that the cost of establishing a practice is even more expensive, Zanan said. Then they enter a competitive segment of healthcare, working on patients who, by and large, hate the experience, however necessary, and often developing shoulder problems from all the bending over to treat them.

“They work into their 70s and 80s, not because they love dentistry, but because they have no choice but to live and die in that dental practice,” Zanan said.

Because of dentists’ pain points, adapting the concept of the warranty, or reinsurance, common in the automotive industry seemed like an obvious solution to Zanan. But when he shared it with agents in the sector, he was met with skepticism about its adaptability.

“Everybody told me it’s a great idea, but it’s not in our wheelhouse,” he recalled of the series of pitches he made.

Meanwhile, Marburger, over at the agency he heads as CEO, Ascent Dealer Services, was struggling with his own pain points, specifically two failed deals, including a large dealer group that represented much of his income.

He thought about how to reverse conditions that make him and many other agents vulnerable to failure by losing a client or two. “I said the only way to combat it is to have multiple verticals.”

He told himself he must expand into power sports and other segments in order to diversify and reach the scale needed to cushion him from unexpectedly dropped clients.

Bourbons and a Hot Idea

Not long afterward, as Marburger prepared to speak at Agent Summit 2023, Zanan approached him to ask if he could share an idea with him over drinks.

“I said, ‘Brother, it’s 9:45 (a.m.),” but he agreed, and Zanan explained his idea about setting up dentists with warranty plans.

“He said, ‘Let’s pretend you’re an agent, and you’re the only one who has F&I products,” Marburger recalled of the conversation. “’What would it look like if there were none of you?’ I said a lot of opportunity.”

Zanan explained that the industry this lone agent would be serving – at 200,000 practices strong – would need him even more than the does the retail auto industry, with just 18,000 new-vehicle dealerships.

“Talk about breaking into new verticals,” Marburger told the Agent Summit audience. “He said, ‘There’s a space we can enter where there are 200,000 opportunities, and we can be the only one.’”

Marburger absorbed the picture Zanan described and continued to ponder the concept after leaving last year’s summit. Then he asked Zanan for another meeting, when Zanan emphasized that automotive agents turn F&I product switches on a regular basis among dealer-clients, so introducing dentists to a new revenue stream opportunity should be doable, to transfer the considerable risk they face.

Marburger, recognizing the opportunity, found a third-party administrator that understands the automotive industry and was willing to underwrite and administer such a setup, Zanan said.

The new business partners co-founded Dental Protection Group and essentially created a program liken to a limited factory warranty on a car and started presenting it to dentists.

Marburger said they want to share the idea with other agents, framing the picture they painted for the summit audience as a competition, not among agents but between them and “big-box providers” in the form of automakers and companies such as Ethos Group.

How it Works

The dental warranty – yes, transferring the risk of tooth decay – covers patients for five years from the date of any procedure they undergo, be it a crown or filling, for the full procedure cost. Everything except teeth extractions and braces can be covered, and the duo are trying to add braces to the mix. The cost of the warranty – which isn’t connected to patient insurance – is built into each procedure, and patients pay no deductible.

As in the automotive world, the warranties include a retention, allowing the dental practice to decide the frequency the patient must visit the practice to keep it valid.

The warranty solves a myriad of problems for dentists, the partners say, while adding a potentially large revenue stream for them and agents.

“(Dentists) can really stand out from competitors, eliminate negative reviews, and most important, it’s all about the money,” Zanan said. “They can grow their business and buy another practice or ride into the sunset.”

The partners wrote the contract template to ensure patients living within a 100-mile radius of a dental practice must return to that dentist for any procedure redo so that the claim is paid to the original provider.

“The average dentist sees about 10 to 20 patients a day. Then assume a loss ratio of 10%,” Zanan said. “That means the underwriting profit is through the roof.”

With current high interest rates, a single practice could generate $1 million in underwriting profit in a decade, in fact, he said, “plus $120,000 in claims paid back to the practice for all the redos instead of goodwilling it.”

Getting Started

The partners acknowledged that they’re in fact not the first or only company to provide dental warranties but said the others that do “lack the sophistication of the automotive industry” and don’t share the underwriting profits. Agents, therefore, have the chance to diversify into dental warranties close to the ground floor of the segment.

“We have the opportunity to build a company on a national level. Usually an agency business is local or regional,” said Zanan, who pointed out every agent listening to their presentation knows at least one dentist to help get them started.

“We’re not asking you to knock on doors and get thrown out.”

The partners say they’ve worked out a lot of kinks in the program as they made pitches to more than 100 dentists. One of the biggest things they realized is that dentists tend to “suffer from analysis paralysis” and aren’t typically financially savvy, so the two avoid the sometimes-confusing term of reinsurance and keep presentations simple.

In fact, Marburger and Zanan say they’d do the presentations for any agents who join them in the enterprise.

“Why would we turn away business? We sell finance products, guys,” Marburger said. “I’ve never been more excited about anything in my life.”

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Hannah Mitchell is executive editor of Agent Entrepreneur. A former daily newspaper journalist, her first car was a hand-me-down Chevrolet Nova.