Conduit Capital’s EthiQal to target doctor indemnity and health cover
Conduit Capital, the investment holding company with stakes in insurance and real-estate brokerage, plans to focus on growing its niche health and medical malpractice insurance businesses over the next 12 months.
The Johannesburg-based group, which brought in a new management team at its Constantia Insurance Group business in February 2020, plans to grow premiums written by its EthiQal brand, which provides affordable medical indemnity insurance for doctors, over the next year. It also aims to grow its health insurance business, which has three arms providing medical evacuation cover, gap cover and affordable primary health cover.
“In terms of near-term growth opportunities where we have a clear competitive advantage, it is definitely our health and medical malpractice businesses,” Sean Riskowitz, CEO of Conduit Capital, told Business Day in an interview.
Conduit Capital reported gross written premiums of R954.8m in the six months to end-December 2020, just less than half the R2.1bn in premiums it delivered in its full-year results to June 30 2020. Riskowitz said the business was likely to deliver full-year premiums around the R2bn mark again in 2021, with health (53%), medical malpractice (10.9%), property and casualty (32%), as well as life and funeral cover (2.8%), being its dominant business lines.
“We’ll probably grow health and medical malpractice faster [than the other insurance lines] over the next year,” said Riskowitz.
He said EthiQal has grown its market share for medical malpractice insurance offered to obstetricians and gynaecologists from nothing when it launched in November 2016 to about 63% now. The company has achieved this by offering more competitively priced insurance cover in a market dominated by the Medical Protection Society, which is based in the UK.
“You had a situation where the cost to insure an obstetrics practice went from around R400,000 in 2014 to around R1m in 2017, which made most practices unsustainable,” said Riskowitz. “Most specialists were working seven months just to cover their insurance premiums, let alone their office administration costs.”
Riskowitz says EthiQal had spent the last three years focusing on the obstetrics market as this was where the need was “most dire”. EthiQal now plans to grow the other segments of the medical malpractice insurance market, where it now has about a 15% market share for orthopaedic surgeons, 3% for general practitioners and 2% for anaesthetists.
Constantia Insurance’s health business also offers an excellent opportunity to grow premiums in niche insurance markets such as medical evacuation cover, where it is active in 19 African markets, Riskowitz added. Gap cover is provided via partnerships with Ambledown Financial Services and Stratum Benefits, while a low-cost primary health option is available via Unity Health.
“There’s an increasing trend with bargaining councils requesting mandatory medical cover for union members, and we see this as an opportunity for growth,” said Riskowitz, adding that only about 15% of SA’s population has medical scheme cover.
Conduit Capital, which also has stakes in the SA franchise of the Century21 real-estate brokerage and a retained interest in ASOCapital’s ASOC Fund 1, narrowed its half-year loss to R50.05m in the six months to end-December. That was a big improvement from the R307.19m loss reported in the previous half-year period, and largely due to a successful turnaround strategy implemented at Constantia Insurance.
“We’re close to where we want to be with Constantia Insurance,” said Riskowitz, adding that Conduit has ample scope for further growth in niche insurance products.
“As a group we only have total premiums of about R2bn, compared to a total market in SA of about R140bn,” he said. “So we could double our business and the rest of the market would hardly notice.”