Medical insurer, AAR, which started operations in 1984 as a rescue and emergency services company before converting into an insurer in 2012, has been riding on technology such as artificial intelligence (AI) to repackage its products as it diversifies into other classes of insurance.
AAR Chief Executive Justine Kosgei spoke to the Business Daily on the significance of putting data and technology at the heart of the insurance business and what this means in the insurer’s journey to switching from one-size-fits-all products to customising products for individuals and businesses.
Recently, medical insurers including AAR held a forum to discuss the issues affecting health insurance in Kenya. Given the persistent underwriting losses for the sector, what are some of the solutions that came out of the meeting?
Statistics show that annually, millions of people fall into poverty because of medical bills yet health insurance is there to make sure that doesn't happen. That speaks to the protection gap. We look at insurance as a social good but we have to do it in a sustainable way.
Premiums are sometimes seen as high mainly because of the low penetration rate. If we had more people taking up medical insurance, we would ride on pooling to make it cheaper.
One of the areas of focus was on claims payment. As AAR, we are putting a lot of effort into customer education and improving the clarity and transparency of policies. We are all in agreement that we have to ensure we make the process of claiming easy and efficient for customers.
Insurers are increasingly turning to technology such as AI to streamline the claims management process. How far is AAR on this front and what gains are you seeing?
Our goal is to make sure that people can access healthcare very fast, so we have tapped into AI to make this journey as seamless as possible. We realised that one of the ways to streamline the claims management process is to reduce human intervention.
We have limited human interventions to special considerations such as pre-approvals. We are seeing fewer complaints, mainly when there is a system downtime. We have simplified our covers to clearly state the exclusions so that customers can understand what they are buying.
Technology has also helped us to come up with low-cost products that the majority of the population, especially small businesses and individuals in the informal sector can relate to.
We have SME products that have covered thousands of small businesses, ensuring that risks such as burglary, fire, flood, or sickness to key persons do not bring down their operations.
Talking about AI, what are some of the specific tasks that you have entrusted AI with and where does this leave your human staff?
We started this journey about three years ago and we keep evolving. Mainly, we have automated the area of claims management. We have a very lean workforce because of that, especially in our claims department.
From the time when claims come from hospital, the hospitals are able to interact with us directly using a digital platform.
When customers are accessing the cover, the system is able to compare their claims with what is in the policy we signed with them and the agreements with medical providers to ensure the right claims are quickly paid. This speeds up payments and also increases accuracy.
The analytics built in the systems give us feedback on areas of improvement.
By freeing the time of dealing with payments, this creates time for our staff to concentrate more on non-routine tasks and building relationships with service providers.
Insurance sector has been accused of a one-size-fits-all approach when designing and pricing its products. What has been the place of AI in shifting from this approach?
Because of the granular data that AI is providing us with, we are able to refine our products. This way, we are able to customise solutions for individuals and organisations.
The technology allows us to create solutions that are affordable to organisations, especially those that have a massive number of people such as government and manufacturing companies. What this means is that we are shifting from providing blanket solutions to providing customised solutions to depending on what different customers want.
Most of our growth is now coming from such initiatives of customisation.
Through customisation, we have also tapped into clients that have never considered health insurance. Such clients had been put off by blanket solutions that were often two to three times their budget. By customising products for such clients, we are able to speak the language that they understand.
At an individual level, we have designed a product called Shwari, which is customised based on one’s location, their risk profile and the kind of cover they want. That allows for a mix of inpatient and outpatient coverage limits that are aligned with the needs of the customer.
We are also using the same model on group covers. For instance, if one has a manufacturing firm in Nairobi, the risk is different from another firm based in Kitale.
In this case, we are able to price differently. Even for supermarkets with branches spread across the country, we are able to customise based on the locations of these branches since healthcare costs also vary from one location to another.
We have covered a lot of ground but it feels like it is just the beginning. We feel like there is so much more because AI is evolving so fast. With time, we should be able to do so much more with this technology.
Last year, AAR started a general insurance company in Uganda. What are you targeting in that market?
We had operations in Uganda before so it was about making it a fully-fledged general insurance. Based on the growth we have seen in Kenya and the profits we have generated, we decided to inject additional capital in Uganda operations and make it a fully-fledged general insurer.
Last year, we injected Sh318 million capital into the group and part of that was for Uganda operations. We want the Uganda unit to do other general insurance business apart from health because clients are demanding these other services. This can only be done by being a fully-fledged insurer.
The process is 90 percent done. Our goal is to get the licence and commence business by July. I think we are on track. The operations will help us provide insurance that is seamless across East Africa by sharing our technology platforms for operations in Kenya and Uganda.
Car insurance is big in Uganda and it is an area that we would like to do as well as play in other forms of general insurance. For example, there is mining that is coming up in Uganda and companies are starting to work as consortia. We believe we can be part of this moment of transformation.
The Uganda operations will also help us in our journey to setting up in the Democratic Republic of Congo. We have been having conversations on how we can enter this big market.
Which opportunities do you see in the informal sector given the data that you have gathered over the years?
We have low-cost products we have developed for the informal sector given that it accounts for most jobs created in the economy. The reason we are customising most of our products is actually to reach out to more SMEs and individuals whose cashflows keep varying.
For example, we have enriched our SME covers to include free travel insurance so that as they go to countries like Turkey or China for their raw materials or finished goods, they are not exposed.
