Kenya-based private health care provider Africa Air Rescue (AAR) has invested in an information technology system hoping to improve efficiency and cut costs as it seeks to expand its network of clinics across East Africa.

The insurance firm will roll out the IT system, which cost about Ksh150 million ($1.74 million), by the end of this month, said the general manager Caroline Munene.

The system, supplied by Indian company Oxygen, will allow its customers to access their statements and AAR to receive real-time bills from hospitals and suppliers allowing for faster reconciliation of accounts.

The system will also help prevent fraud and allow for better analysis of data and thus faster processing of claims.

Serving clients

“It will help us to be efficient in managing the business as well as make serving our clients simple,” Ms Munene said. She said the system would be used in AAR clinics in Kenya, Uganda and Tanzania.

Last year, AAR left Rwanda saying the business had been struggling since 2009 when the capital markets regulator revised upwards the capital requirements for insurance companies from Rwf100 million ($168,900) to Rwf1.5 billion ($2.million).

READ: AAR to exit Rwanda in 2012 citing low business

Improving efficiency in operations through use of technology, increasing the distribution network and enhanced regulation – especially in the pricing of premiums – are some of the measures analysts have highlighted as key to growth.

Penetration of insurance products remains low at about 3 per cent in the region, compared to 11 per cent in more developed markets like South Africa.

Demand for medical insurance in East Africa is partly being driven by changing demographics of diseases such as cancer, which is fast replacing heart disease and HIV/Aids as the biggest killer.

Cancer is expensive to manage and families are forced to fund-raise or sell their assets to treat it.

Ms Munene said one of the biggest problems in the industry is securing good distributors or partners in the business.

AAR Insurance provides dental, optical and maternity covers, which were not previously offered.

The company intends to offer other products, including Work Injury Benefit (Wiba).

Ms Munene said AAR Insurance has been cross-selling these new products targeting its existing clients who have taken up the medical cover.

The expansion creates a good network for distribution of their products and medical services.

Ms Munene said the firm has opened two clinics in the past four months and plans to open others later this year. In Uganda, AAR hopes to open new service centres in Entebbe, Rubaga, Mbale and Mbarara later this year.

The growth and expansion of its clinics has been fuelled by a Ksh750 million ($8.72 million) investment by the Investment Fund for Health in Africa (IFHA). The Dutch fund bought a 20 per cent stake in the insurer.

But with the Kenyan regulators capping the shareholding of a single individual to 25 per cent in an insurance company, AAR Insurance may have to turn to other investors.

Kenya-based Resolution Insurance Company Ltd, formerly Resolution Health East Africa, also plans to spend Ksh500 million ($6 million) on its expansion project in the East African region in the next one year.

Other key regional players are Jubilee Insurance, UAP, APA and Britam Insurance.