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Health Insurance Software Development: Processes, Costs, and Tips

Max Babych

Max Babych


14 min

This article will walk you through the health insurance application development process from start to finish. 

We’ll cover:

  • An overview of why building a health insurance app makes sense
  • A cost breakdown for development
  • What preparatory steps do you need to take before the development
  • The process for creating a mobile health insurance app
  • The team required for the development process
  • A technology stack overview
  • Tips for choosing the right development partner
  • And more!

The article is the perfect guide for startup founders, product managers, entrepreneurs, and anyone interested in developing a health insurance mobile application.

If you’re a visual learner, check out the bonus infographic for a pictorial overview.

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Why Develop a Health Insurance App Now?

The health insurance market is estimated to be worth $3.3 trillion by 2028.

But we must admit that the insurance market is a red ocean: an old, already divided market between a few key players.

On the other hand – such markets are a great opportunity for creative disruption.

So, developing health insurance apps allows you to test your product hypotheses in a large market with paying customers. And make it profitable from day one.

Still in doubt? Here are some statistics proving that owning a healthcare insurance app is worthwhile.

Health Insurance Market Growth Statistics

Here are some statistics that suggest health insurance is booming:

These impressive growth statistics have caught the attention of venture capitalists, and they’re investing heavily in the sector, particularly in health insurance products.

The illustration shows statistics on the development of the health insurance market over the past few years

Here are some facts supporting that.

Venture Capital Investment in Health Insurance

Below are some statistics that suggest that VCs are investing a lot in health insurance:

The two sets of statistics above show that owning insurance applications can benefit VCs willing to fund ideas and products in that sector.

Case studies of companies already benefiting from this business model are Oscar Health Insurance, Hi-Tech Health, and Aetna.

The above statistics are indisputable proof that it is worth investing in launching a new healthcare coverage mobile app.

The illustration shows statistics on venture capital investments in the health insurance niche

Let’s take a look at how much we are talking about.

How Much Does it Cost to Develop a Health Insurance App?

Creating a medical insurance app for your startups ranges from $60,000 to $80,000.

The development price will depend primarily on the type of medical insurance app being developed and the type and location of the development team.

Let’s shed more light on each of these factors.

Cost By Team Type

The development team affects your application’s cost. The most common team types are a local agency, freelance team, in-house team, and outsourced agency.

Below is a cost spreadsheet detailing the price of creating a medical coverage application using each of these team types:

Type of teamAverage cost, $
In-house, the US170,000
Local agency, the US200,000
Freelance team40,000
Outsource agency70,000

We’ll educate you on the differences, perks, and cons of each hiring model, so you choose the best for your organization.

1. In-house Development Team

This hiring model entails employing a team of developers directly from the labor market to work as full-time employees of your startup.

Here, you must provide a suitable work environment and other legally-bound responsibilities. Before choosing this model, it’s best to consider the pros and cons:

  • Communication between the health insurance mobile development team and startup is smoother, as everyone works in the same building.
  • Development teams easily understand corporate goals and changes through regularly interfacing with management.
  • The startup has total control over the developmental workflow.
  • In-house hiring is one of the most expensive employment models.
  • Labor laws make workforce adjustments rigid.
  • There are numerous hidden costs with this employment model. Examples are office management and tool maintenance. Our outstaff calculator can help you shed light on this.

2. Local Agency

The option of hiring a local agency is to create and maintain a health insurance application by software companies in your country.

Like others, we’ll be shedding light on its pros and cons:

  • Cultural and timezone similarities between both parties ensure smooth cooperation.
  • Unresolved conflicts between both parties can quickly be resolved legally.
  • Startups domiciled in the US or other high-income nations need an unlimited budget for this option.

Due to its expensive nature, startups in high-income countries have to explore other options. Thus, we’ll discuss other cheaper alternatives.

3. Freelance Developers

They are independent professional software coders with expertise in creating apps and websites.

They’re not employees of any organizations and are available for hire on a  per-project basis.

Like other options on this list, it also has pros and cons.

  • Most freelance coders have diverse knowledge and experience creating solutions across multiple niches.
  • It has a flexible employment model.
  • They are less expensive than in-house and local agency hiring models.
  • Freelance developers may pay abruptly a ditch for a more profitable one.
  • There’s a possibility of a data breach due to unwholesome source code management from freelance developers.
  • Although freelancers may charge lower rates, they often take 2-3 times longer to create an app than outsourcing to a company.

Due to the sensitive nature of health insurance apps, it’s best to opt for a better alternative. As such, let’s discuss a more suitable option.

4. Outsource Agency

Outsourcing involves working with a software development agency outside your country to create and maintain a website, mobile application, or software.

Statistics suggest that the use of outsource agencies in development and maintenance rises yearly, evidence that more startups are adopting this model due to its multiple advantages.

Here are some disadvantages and advantages of partnering with an outsourcing agency:

  • Startups can easily scale or reduce their workforce without breaking labor laws.
  • They help create high-quality apps at a cost-effective price.
  • They have an extensive network of coders, and you can easily access highly skilled programmers at prompt.
  • They offer deep insight into the app developmental process.
  • Timezone and cultural differences may affect developmental workflow. This is particularly common among US companies outsourcing to India-based health insurance app development teams.
This picture describes the cost of developing an application for health insurance, depending on the type of team

Now let’s see how geography affects the cost of developing a health insurance mobile app.

Cost By Team Location

Let’s look at the cost breakdown of health insurance app development defined by agency location.

LocationAverage cost, $
The US200,000
The UK180,000
Western Europe150,000
Eastern Europe70,000
South Asia50,000

As seen in the spreadsheet above, the cost of developing a health insurance app varies with the team’s location.

In the US, the UK, Australia, and Western Europe, the cost of creating an app is very expensive due to the labor cost in those nations.

Conversely, South Asia has the lowest developmental price on the list. However, they’re known for low-quality apps.

For top-notch cost efficiency, it’s best to opt for a company in Eastern Europe. Particularly a Ukrainian one, as they are prominent for quality apps.

The picture shows the cost of developing an application for health insurance, depending on the location of the team

How Health Insurance App Development is Different

Health insurance development differs from others in features and characteristics. While other insurance applications can do away with specific traits, healthcare insurance must:

  • Ensure top-notch data privacy,
  • Use big data to evaluate and price premiums,
  • Guarantee constant availability.

Let’s shed more light on these points!

1. Data Privacy

Privacy of Medical records is key to maintaining the trust of target users. A single leak in a policyholder’s health data can make your insurance app undesirable.

Sometimes, such breaches may result in criminal and civil lawsuits. And in the case of startups based in the United States, not having and enforcing a top-notch data privacy policy attract at least $50,000 in fine.

For example, New York fined EyeMed $600,000 due to a leak in patients’ data.

Some steps to safeguarding health care insurance data from your app are:

  • Follow the HIPAA and GDPR compliance;
  • Cooperation with a highly experienced software development agency;
  • Multi-layered QA testing;
  • Have a team to enforce data privacy policies;

In the process of app development, developers don’t need access to any kind of users or patients’ health information. They could use test, faked sets of data.

Once you’ve ensured top-notch data security, another challenge to surmount is data gathering and usage.

2. Big Data Analytics

The growing usage of artificial intelligence and wearable technology like the Apple Watch and Fitbit led to increased personal data collection.

Health insurance companies use Big Data analysis to identify potential health risks.

Insights from these analyses incentivize health risk reduction, accurately underwrite, and predict the risk factor of different groups.

It’s also crucial to help health insurance startups determine the best premium coverage plans.

As a start point, you can consider buying such Big Data insights. Otherwise, to gather user data from your app, do the following:

  • Configure data collection metrics,
  • Integrate third-party app analytics tools,
  • Integrate relevant aHIPAA and HITECHrtificial intelligence systems.

Beyond Big Data, uptime reliability is another essential feature that makes healthcare app insurance different.

3. Uptime and Reliability

Health insurance apps require regular uptime availability as many insurance policy owners require on-spot emergency insurance claim payment and verification.

However, not having a proper backend infrastructure can result in recurring downtimes, preventing app users needing urgent care from accessing emergency healthcare services.

You can ensure a top-notch uptime rate by

  • Adopt a reputable infrastructure provider,
  • Have a 24/7 customer support team,
  • Have backups plans for server failure,
  • Hire a software maintenance team.

Although the features mentioned above are suitable for all insurance apps, they’re of utmost importance in the health insurance niche.

The illustration shows the main differences that health insurance application development has

Before you start creating your app, there are things to do before commencing development.

Key Considerations Before Developing a Health Insurance App

Common mistakes made by entrepreneurs and founders before creating their products are:

  • Not having a marketing budget
  • Not identifying relevant regulatory laws.

Let’s help you makes sense of these.

1. Plan a Marketing Budget

A survey by Statista in the United States suggests that significant health insurance companies spent $184 million on marketing alone.

According to U.S. Bank, the lack of a well-developed marketing plan is responsible for small business failure.

These statistics show that although large insurance businesses know that budgeting is the key to dominance in the market, small startups are often negligent of this.

As a startup, ensure a robust marketing budget to help you attain your business goals and fund your marketing strategy.

Your marketing budget should be 2x-3x your product design and development budget.

Assuming the cost of your health care insurance app is $50,000, your marketing budget should be about $100,000 and $150,000 yearly.

The illustration shows one of the things to focus on before developing a health insurance app is planning a marketing budget

2. Ensure Legal and Regulatory Compliance

Health care insurance is regulated by various laws that vary with your country of residence.

Here’s a spreadsheet of regulatory laws and countries where they apply:

Regulatory lawStartups Affected
HIPAA and HITECHBoth laws regulate startups and businesses operating in the United States.

HIPAA, which stands for Health Insurance Portability and Accountability Act, mandates startups to take adequate steps to protect patients’ health information.

HITECH criminalizes deliberate leaks in user health data and leaks due to negligence from insurance agents and service providers.

GDPRThe General Data Protection Regulation enforces data protection and privacy for startups operating in the EU.
PIPEDAPIPEDA regulates businesses operating in Canada on the use of consumer data.

All Insurtechs operating in Canada are also regulated by the Office of the Superintendent of Financial Institutions. They protect users from EHR leaks.

PCI-DSSAll health insurance startups accepting payment cards must abide by the Payment Card Industry Data Security Standard.

Use these tips to optimize compliance:

  • Have an in-house insurance and financial services legal compliance team;
  • Only partner with an app development company that understands compliance laws;
  • Hire an in-house human resource team with knowledge of present labor laws;

Feel free to read more about healthcare app development and HIPAA compliance app development in our complete guides.

The illustration shows one of the things to focus on before developing a health insurance application, namely, compliance with the law

Once you’ve figured out the above, you can commence development.

How to Develop a Health Insurance App

Here, we’ll discuss the 4 stages of health insurance mobile app development.

Once you develop a Minimal Viable Product, you can then launch, gather feedback, and make necessary modifications based on the feedback obtained.

The first ideal step in product development is the discovery phase. Let’s shed light on what it entails.

Step 1. Discovery Phase

This phase involves gathering information on project requirements and researching an ideal development workflow.

The development team outlines features to build, create milestones, and identifies niche-specific compliance laws to be mindful of.

Let’s break down the discovery phase into steps:

Market ResearchNearly half of all business failures can be traced to poor market research.

Through in-depth market research, you’ll understand the acceptability of your product, market size, and health risks of different groups.

Competitor AnalysisHealth insurance market is overly saturated. Thus, analyzing your competitors’ weak points and strengths is imperative to carve a unique market niche.

Lack of detailed analysis has been responsible for 19% of business failures.

Identify your goalsCB Insights report that lack of goals is the primary cause of 13% of business failures.

As such, brainstorm your business and technical objectives, and ensure your development workflow aligns.

Cost analysisStarting a health insurance business is capital intensive.

As such, it’s best to conduct a detailed cost analysis and consult your investors for development, marketing, and maintenance funds.

The benefit of this process to founders entails:

This picture describes one of the steps in the development of a health insurance application, marking the discovery phase

After mapping the development process, you can start designing the app.

App Development & Custom Mobile App Development

Crafting Custom Mobile Apps That Delight Users!

Step 2. Design Phase

The list of requirements you’ve mapped out in the discovery phase is used to make the UI/UX design for the application

The delivery phase here includes one or more designs that maximize the product’s business goals and can aid the development process.

We’re not going to look at the details of the design itself since we have an insurance application design guide but instead talk about the role of the UX/UI stage in the development process.

The app design process helps communicate the values of the product and ensures the app appeals to the target audience in the ideal way possible.

The prototype design also acts as a guide to aid development and predict expected deliverables.

This phase is very flexible as output often requires adjustments based on feedback from users and stakeholders.

At the end of the design phase, you should have these:

  • An interactable prototype,
  • A user experience wireframe for different screen resolutions,
  • An original Figma design file,
The illustration shows one of the steps in the development of a health insurance application, meaning the design phase

The development only commences when all stakeholders have approved the deliverable from the design phase.

Step 3. Development and Testing Phase

Health insurance app development is all about turning a design into a live app using the code.

There processes here can be divided into the mobile, backend, and sometimes, frontend development. They both mean:

  • Mobile development stands for the app’s creation, a client-side interface, and implementation endpoints from the backend. For cross-platform apps, use React Native or Flutter, and for native ones, use Swift or Kotlin.
  • Backend development builds behind-the-scenes functionalities necessary for the proper workings of the solution. These developers use backend languages like Node.js, Java, and PHP.
  • Frontend is the same thing as mobile development – the creation of an interface. Sometimes it is used to develop web-based admin panels for mobile products. Here developers could use React.js, Vue.js, Angular, and so on.

This division is arbitrary since the interface can be developed separately from the database.

It is also important to note that development is an iterative and iterative process:

  • You outline the features,
  • You create documentation,
  • You design a future app,
  • You develop it,
  • You test it and push it to development again,
  • You have a bugs-free app.

This is what a typical iteration looks like. There can be an infinite number of iterations, depending on the features and the frequency of their updates.

The illustration shows one of the steps in developing a health insurance application, meaning the development and testing phase

Let’s talk more about this. Let’s give you insight into the generic and niche-specific features your insurance app should have.

Example of Features to use in a Health Insurance MVP

The role of an MVP is to test startup hypotheses on the market quickly and cheaply. Thus, these features set – the minimum your health coverage app should has:

  • User profile,
  • List of available policies,
  • Health insurance plans listing,
  • In-app payment gateways,
  • Document scanner,
  • Push notifications.

And now, let’s take a look at feature expansion.

Example of Features to use in Scaled Health Insurance Product

  • Healthcare providers pairing,
  • Chatbot,
  • Lab result checker,
  • Appointment scheduler,
  • Telemedicine, and other mHealth functionalities.
This picture describes examples of functions to be used in a health insurance application

The next and final step in development is to launch your product into app stores.

Step 4. Launch, Maintenance, and Improvements

We’ve already talked about the marketing budget – this is when you start spending it.

The role of marketing is to attract users. Product managers will collect data on how the different stages of the customer journey are going and user feedback.

By putting these two things together, stakeholders will plan future releases that align with the founder’s vision, market trends, and user expectations.

However, work doesn’t end there as you’ll have to expend time to maintain it.

You need a fully dedicated app team to support your health insurance app technically.

Ideally, your maintenance team should run on a yearly budget of about 25% of your Insurtech mobile app cost.

If it costs $100,000 to develop an app, your maintenance budget shouldn’t be less than $25,000. The bulk of your budget will be expended on:

  • Bug correction,
  • Feature extension,
  • Monitoring & analytics,
  • Real-time product support.
The illustration shows one of the steps in the development of a health insurance application, which means launching the application

Now let’s take a look at the best-suit team composition.

Required Team Roles for a Health Insurance App

The team required to develop a fully-functional health insurance app is:

  • Project Manager
  • Business analyst
  • Solution architect or CTO
  • UI/UX designer
  • Backend developer
  • Mobile developer
  • Quality assurance tester

Tech Stack for a Health Insurance Platform

When it comes to technology stacks, the options are numerous.

Let’s take a look at some stacks that we use, particularly those that can guarantee a highly secure product:

TypeTech Stack
BackendNode.js, Express.js, Laravel
DatabaseMySql, MongoDB, and Redis
HostingAWS,  Vultr
Mobile development
  • React Native for cross-platform health insurance app
  • Swift for iOS
  • and Kotlin for Android
UI/UX designFigma, Principle, and Balsamiq
ManagementSlack, Jira, and Confluent.
The illustration shows the technical stacks needed to create an insurance application

What’s next? Let’s discuss some tips for developing a health Insurtech product.

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How to Choose Health Insurance App Developers?

Let’s educate you on choosing a reliable app development agency for partnership.

Tips below are universal, and you can use them as a guide to choosing programmers for your health insurance application. Below are the steps to follow:

  1. Check their portfolio. Check their track record of past projects to vet their capacity to deliver on their promise. However, this is not the best marker if you create a new product with rare functionalities. But if you like the quality of their products, then it’s a hint that they have enough expertise to pull through with the deliverable.
  2. Check their background. Before signing a contract, spend time researching reviews on reputable business listings. Check out their social media profiles, websites, blog posts, case studies, etc. Contact some past or current customers within your network of influence, and ask questions about their capacity.
  3. Hold one-on-one discussions. Once you’ve shortlisted a few prospects, it’s time to discuss with its development team and see if they’re knowledgeable enough. If you don’t have technical experience, it’s best to involve an expert, preferably your CTO. And for sure, compare fees.
This picture shows tips for choosing health insurance app developers

Next Steps

Building a seamless application from scratch is no small feat.

Our expert engineers have designed and delivered dozens of mobile solutions for the healthcare industry. We know what it takes.

At SpdLoad, we can develop an intuitive, secure MVP in just 4 months. Check out our proven development track record on Clutch and explore our case studies.

Reach out now for a free consultation, and let’s build something great together!

Bonus Infographic

Here is a summary of our detailed guide. Learn the highlights of developing a health insurance application and the factors that affect pricing.

This infographic shows the basic steps you need to take to develop a health insurance application

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