Health Insurance Software Development in 2025: Trends, Challenges, and Innovations

Today’s medical and healthcare practices are becoming increasingly integrated with smart and automated technology. The market for digital health users is growing restlessly, with over two billion people using various types of digitized healthcare — about 2.2 billion in 2025, to be exact, which is expected to hit 2+ billion by 2029.

The industry’s providers are not lagging behind, getting equipped with productivity-boosting software — over 77% of medical professionals from varying branches (out of over one thousand surveyed) use telehealth or eHealth tools at least once a week. This can also be clearly seen from the widespread tech-enabled medical centers now functioning even in the remote points of the planet. 

Health insurance takes a special place in all this, forming one of the most demanded and consistently profitable segments of global healthcare. So much so that the market of software for health insurance has long become its own thing, accounting for 3–5% of all insurance premiums globally.

This article provides an overview of this market based on a variety of industry studies, themed surveys, statistics, and insights. We also point out, it’s safe to say, the total dominance of software and digital tech in today’s health insurance practices. 

Health Insurance Software: Market Overview in 2025

In 2025, the market size of health insurance software is projected to reach $67.73 billion, rising to $116.66 billion by 2029, with a compound annual growth rate (CAGR) of 14.9%. But there’s more than that. 

Industry surveys suggest that the digital-first adoption of health insurance is gaining more upward traction than ever. Currently, around 70% of health insurance policyholders prefer using digital channels (web and mobile apps) for policy management and claims processing. Meanwhile, more than 65% of insurers tend to self-develop proprietary systems for digitized workflows, while even more are forging technological partnerships for external support (more on that below).

Customer expectations

Today’s consumers expect highly intuitive and integrated digital experiences. Research shows that more than 80% of health insurance customers demand seamless access across multiple channels (web, mobile, and desktop). They value features like real‑time support, easy navigation, and personalized interactions that simplify complex tasks like claims filing and policy updates.

Consumers are also more focused on simplicity and personalization in managing their health insurance policies. For example, McKinsey reports that the integration of generative AI for customer interactions boosts customer acquisition rates by up to 30%. Naturally, this brings a felt reduction in administrative overhead as well.

Trends in Health Insurance Software in 2025

Today’s healthcare insurance software horizon is shaped by many factors and tendencies, all of which are set in motion by newly adopted technologies and approaches to structuring both internal workflows and external interactions with clients.

Here are the main technologies and solutions to keep in close sight in 2025.

AI and machine learning

At the forefront of technology in health insurance are generative AI models (like DALL-E, ChatGPT, Google Bard, etc.) and machine learning algorithms, which are usually put at the core of healthcare data analytics and personalization tasks. 

How AI is used

Gen AI’s natural language processing capacities help analyze claim documents in bulk. AI’s precision helps efficiently match them with policy terms, while a self-learning machine learning algorithm flags discrepancies and automates the detection of even yet unseen fraud attempts.  

This automation cuts the time required to process claims, lowers error rates, and balances out operational costs. To back it up, early studies suggest that AI-driven insurance claims automation can reduce processing cycle times by up to 30% and cut related administrative expenses by over 50% compared to traditional manual systems. 

How machine learning is used

Consistent provision of health insurance services accumulates immense streams of data. Machine learning models analyze all this diverse data accumulated during insurers’ service interactions to predict potential future claims or flag clients with high-risk insurance traits. This can be used for personalized policy pricing and quick interventions to handle disputed claims. 

On top of all that, ML gives us this form of real‑time risk analysis to help keep underwriting accurate and relevant without going far, while also driving a more preventive approach in health management. In the long run, integrating machine learning in healthcare helps lower claims costs and improve overall portfolio performance. 

Other applications

Other important applications of AI and ML for health insurance software development include:

• Sensitive, automated risk assessment — insurers can use real-time monitoring of health metrics. By integrating data streams from electronic health records, IoT devices, and wearable technology, insurers can monitor patient readings, adjust risk profiles, and assess claim situations much more efficiently.
• Remote consultations and diagnostics — the COVID-19 pandemic has left its trace for good, and remote consultations are now a normal practice for all age groups. Even some basic diagnostics are possible with the right telemedicine tools for fast and efficient solving of disputed insurance claims. 

Blockchain for data security

With all that being said about AI and ML, blockchain has been faithfully serving as the foundation for both these and more related technologies. For a field as data-intensive and sensitive in terms of individual contact as insurance of one’s health, data protection is uber important. Blockchain’s data immutability principle has also reshaped the common ways in which insurers protect it.

The holding pillar of blockchain’s overwhelming efficiency is the decentralization of access. Without a central, universal point of access to sensitive data, it is pretty impossible for a malicious party to break into business records or expensive asset storage single-handedly. Once the access is decentralized, each owner of the data storage must manually authorize any level of access to it.

Data immutability achieved through decentralized systems is the main benefit of blockchain in insurance, as it offers some tangible means for protecting invaluable client data from leaks and keeping insurance claims free from daring fraud attempts. 

Lastly, with overall safer access to insurance data, decentralized systems can be used for cross-border access to policies, allowing insurers to scale internationally without too many security concerns. 

IoT and wearable tech

The Internet of Things has formed an essential field of hardware and software for medicine and healthcare (and respective insurance practices). Advanced healthcare providers like Medtronic have come up with concepts and successfully implemented retail versions of “remote pills” for much safer, cleaner, and painless endoscopy procedures. 

PillCams are the most technological pills in existence, allowing doctors to visualize the insides of patients’ small bowels with the help of an ingestible camera made into a simple, tiny pill. Apart from video and photos, such pills can also deliver various sets of health metrics.

There are also working prototypes for smart pills, developed by Caltech researchers to have more control over the pill traveling the gastrointestinal tract, deliver drugs more efficiently, and track the most unreachable areas of the human organism. Based on the data gathered via smart pills, medical specialists can customize health plans and make the best individual treatment decisions at the right time. 

But it all comes down to the main benefit — all the data available to a healthcare insurance provider through tech. All patient data that an insurer collects through connected IoT devices, reports generated in wearables, electronic health records platforms, etc., can be integrated into insurance underwriting. 

This will automatically update a client’s record with relevant claims and important health milestone notes. 

Should the accuracy of smart IoT be trusted?

A lot depends on the AI’s underlying model, its training, quality of datasets, etc. But if we are asking a general question, in particular instances, full-on complex surgeries are conducted remotely with the help of precise IoT interfaces and robotics. The total removal of human-factor errors is an actual benefit of AI in health insurance. So yes, it’s pretty safe to trust precise calculations to a good AI model. Just make sure to turn to proven AI and ML development services providers.

Digital transformation

The Geneva Association surveyed twenty-one large-scale health insurance companies operating in different corners of the Earth, finding out that more than 80% of healthcare enterprises have formed and actively maintained partnerships (technological, business, or otherwise) with insurtech or digital platform creation providers. 

Most companies went remote, and a vast majority are looking to go totally paperless at this point. We see platforms like Lemonade and GoHealth emerging as accessible tools for getting insurance and managing insurance policies. 

A lot of people today expect all the essential medical and healthcare functions to be available right out of a standard smartphone app, to which we owe the emergence of mHealth, a niche of medical software solutions that run on mobile hardware. Today, mHealth is a $83 billion-valued market, with healthcare and insurance forming two of its essential segments.

You can use all the above knowledge to your advantage. Considering the highly relevant demand for insurance-enabled technology, make sure to leverage user-oriented platforms asap. On top of that, a dedicated mobile app with a personal user cabinet containing claims and other insurance management features will additionally drive digital transformation in healthcare insurance.

Challenges in Health Insurance Software Development

A good knowledge of the latest healthcare insurance software tendencies helps realize the demand for these solutions and pick the most promising, potential-rich directions and niches. 

However, knowledge of the pressing challenges in the same field is even better, as it can prepare you for tapping into and adopting the best-fitting insurance software. 

Data privacy and security

If you operate with the personal and medical information of health insurance clients, you are bound to carefully stick with the regulatory healthcare standards, HIPAA and GDPR among them. This can be difficult for several reasons. Ransomware, phishing, and other cyber tricks are only baseline threats. The more data you accumulate, the more effort it requires for verification and protection. 

But the biggest data challenge stems from the next, legacy-related challenge. Meanwhile, data accumulation can be handled by going digital-first and adopting super flexible cloud-based insurance software.

Integration with legacy systems

A healthcare insurer may already run operations on a proprietary software system. But if that system isn’t regularly updated, maintained, and scaled along with data accumulation and tech demands of users, it can do more harm than good. Even a new health insurance management system, however open-ended and expandable, can be quite complicated to integrate with the legacy software. 

The best way to avoid this altogether is to consult with a proven web development services provider and stop letting legacy software slow your business down.

Scalability and performance

Flawed, difficult-to-manage insurance company infrastructures are a common issue. In large part, that’s because those infrastructures and underlying workflows aren’t scaled and maximized in their performance. 

75% of physicians surveyed by Doximity confessed that they could use less administrative burden placed on them with all the routine tasks, extra responsibilities, and manual overworking. 

User Experience (UX)

According to the survey by the Center for Connected Medicine, almost 30% of healthcare institutions haven’t yet managed to instill reliable communication standards across internal workflows. This is reflected in the inability to cover the needs of target customers and provide the fullest level of user satisfaction. This also means only one thing — if the UX is lacking in-house, it’s hard to provide high-quality experiences for clients externally.

However, the main pressing reason for such hurdles appearing in the first place is, again, lack of telehealth integration, outdated systems, or a complete pass on connecting digitized policy administration systems and patient engagement tools. 

Tips for Developing Market-Defining Health Insurance Software

To simplify your healthcare software journey, here are some pro tips to guide the development of top-notch software according to today’s market standards. 

• Embrace modular architecture and SaaS

Working on software with a modular structure gives you that drag-drop flexibility of building a product brick by brick. The resulting solution is easier to scale where and when needed. A versatile system can be founded on independent, replaceable modules — e.g., one for claims processing, one for policy management, and another for customer-facing interactions. 

Such modules are also easier to track, troubleshoot, and update. To make things even simpler and achieve the ultimate healthcare insurance cost optimization, a SaaS platform can be leveraged, where a cloud or an on-premise platform is customized according to your needs and maintained on the provider’s side (saves tons of costs by allowing you to rent a platform rather than building one from scratch).

• Tap into predictive analytics

Insurers can go beyond reactive decision-making to proactive risk assessment and smarter pricing models by leveraging historical claims data, customer behavior, and operational trends. For one thing, ML algorithms can analyze past claims to predict future claim volumes, helping insurers adjust premiums based on forecasted costs.

For example, using predictive analytics for insurance, an agency can make out potential insurance risks that certain clients can pose and decline risky insurance. 

• Enable multichannel access

Clients like to switch between several devices and platforms when interacting with insurers and receiving insurance services. This multichannel experience must be thoroughly planned and tracked for the smoothest UX. 

For instance, a user should be able to use customer portals for insurance type selection and sorting in the cart, then jump freely to a mobile app to finalize the purchase and track the progress of their claims in a personalized online cabinet.

• Prioritize real-time data processing

Speed matters in insurance — especially when it comes to fraud detection, risk assessment, and claims approvals. Implementing real-time claims processing and data pipelines helps ensure critical information is processed immediately. As such, an insurer gains a rapid way to spot anomalies, prevent fraud, and respond to client disputes.

To do that, you can integrate Apache Kafka and set it up to detect fraudulent claims as they are submitted. With an integration like this, you will be able to take action before a payout is made. 

• Invest in accessibility

A truly effective insurance platform must be usable by everyone, including individuals with disabilities. Following the web content accessibility (WCAG) guidelines will allow you to make sure that users with any extent of physical or cognitive abilities can access your software for health insurance.

• Stay updated on regulations

The insurance industry is heavily regulated, and compliance in health software creation and management practices isn’t really optional. If you want to avoid penalties and preserve reputability, keeping up with evolving standards like HIPAA, GDPR, and industry-specific regulations is necessary.

Using automated compliance tools available in the software for health insurance can help flag potential issues early on, while scheduling regular regulatory reviews helps make sure the software always meets the latest legal requirements. 

• Add gamification elements

Engagement equals client retention, which results in decent and consistent profits. To gamify healthcare insurance software, you can use:

1. points and rewards for performing certain actions with the software (like filling out a profile in a user cabinet);
2. badges for milestones and achievements (e.g., based on the track record of insurance interactions);
3. virtual coaching and chatbot personalization (the more interactive elements, the better, especially if they are intelligent, useful, and personalized).

• Double down on post-launch support

The success of an insurance platform doesn’t end at deployment — it requires continuous monitoring, updates, and support to maintain peak performance. Establishing a dedicated support team that uses application performance monitoring (APM) tools can help detect and resolve issues before they impact users. This can save tons of overhead costs and unnecessary expenses, time and resource-based.

Case Studies of Companies Successfully Use Health Insurance Software

To seal all this info, let’s now take a look at some of the standout case studies of real-world healthcare insurance software providers. These companies can both consult your tech journey and fully implement the required solutions.

UnitedHealth Group

UnitedHealth Group has implemented several notable health insurance software solutions, and a few case studies highlight how these implementations have improved efficiency and service quality.

One case study from the AIX Expert Network details how UnitedHealth’s Agent Virtual Assistant (AVA) leverages conversational AI to collect and classify patient information, leading to faster claim turnarounds and improved underwriting decisions.

In another case study, UnitedHealthcare standardized its knowledge management across the organization using Verint Knowledge Management solutions. The implementation of Verint helped reduce average search times for information by five seconds and boosted agent efficiency by 10% while lowering the total cost of ownership by around $500,000 annually compared to their legacy system.

Elevance Health (formerly Anthem)

Anthem’s investment in digital transformation was used to create a fully integrated mobile app, called Sydney Health, for policy management that enables insurance clients to access real‑time policy updates and file claims using a feature-rich, personalized application. 

Today, the company is renamed Elevance Health, and its tech integration journey continues full speed ahead. As such, the company leveraged Amazon Web Services to modernize its claims processing systems by implementing Amazon Textract. This tool uses machine learning to automatically extract data from paper-based and digital claims, which helps battle manual data entry errors.

Cigna

Cigna is among the top major investors in digital transformation among big health insurance providers, putting a whopping $4.4 billion into digital reshaping strategies. There is also an extensive case study by AIX. In it, Cigna employs an AI rule-based system to improve claim payouts, implements a smart internal talent management system, and boosts insurance fraud detection mechanisms through blockchain.

Conclusion

The field of health insurance software solutions is as booming as never, and it’s important to keep up the pace with all the tech if you are looking for any level of competitive edge in this arena. Thankfully, you get all the hints and directions you need to maximize and improve.

As a health insurance software development provider, you can use this exhaustive overview as a guiding checklist for the most relevant elements and approaches for the creation of market-defining products. 

This can also come in handy for startups and projects merging with the fields of healthcare or insurance software solutions. If you are seeking a tech partner to enable your healthcare insurance journey, you need a seasoned agency.

Talk to specialists at Django Stars — we put years of experience and certified expertise into your project, tailored collaboration to your unique needs.