Insurance Software Development: Cost, Implementation & ROI

The insurance industry has witnessed significant evolution, with technologies like customized software and artificial intelligence playing a core role. The insurance platform market around the world had a valuation of $116.16 billion in 2025. The market is expected to grow with a CAGR of 12.3% to achieve the valuation of $207.52 billion by the end of 2030. The key challenges, such as slow claim processing, manual analysis of incident reports, and a lack of customer satisfaction, have been the core motivating factors for businesses to opt for insurance software development.

However, the cost associated with insurance software development services still shapes the decisions of most of the FinTech companies. While the average cost ranges between $40,000 to $300,000, it can be highly optimized using certain cost-saving practices. In this blog, we will be talking all about custom insurance software development, the cost, the development process, and more.

Why Traditional Insurance Systems No Longer Work?

Insurance has evolved from a traditional product to a digital service, portraying itself as a life and finance savior in case of any incident. However, no one has time to visit the insurance offices and banks to register their case and get the claim. Thus, the traditional vehicle insurance system is no longer efficient to cater to changed customer expectations. Here are some of the reasons to upgrade from the traditional vehicle insurance systems-

1. Outdated Risk Assessment Factors

The traditional vehicle insurance relies on static factors like car model, age, and personal details of the driver. Thus, it eventually misses the more important factors like driver behavior, which has the most impact on the insurance claim chances.

2. One-size-fits-all

The traditional insurance software development solutions don’t cater to the modern usage patterns like shared mobility, part-time driving, and carpooling. Thus, it requires a pay-as-you-drive model.

3. Paper-Heavy Claim Process

It can never be denied that the traditional insurance workflow included a lot of manual reviews, lengthy paperwork, and took weeks to settle even a simple claim. As customers now expect a faster andmore active resolution of insurance policies, it requires businesses to shift to a more efficient insurance software.

4. Data Silos

The legacy systems in the insurance industry carried outdated IT systems, which prevent the utilization of real-time data. Thus, it becomes impossible for the insurance companies to provide more personalized and competitive pricing in insurance plans.

Core Systems Required in Modern Insurance Companies

1. Policy administration system

Custom insurance software development includes a policy administration system that helps to manage the entire lifecycle of a particular policy. Whether it is a quotation based on issuance, endorsement, or the product configuration, it takes care of the entire process. The policy administration system helps the insurance companies to launch the product faster.

2. Claims management software

As the name suggests, claim management software is designed to automate the claim lifecycle while taking care of various tasks like claim intake, assessment, validation, settlement, approval, and reporting. It can be easily integrated into the document management system, fraud detection tools, and third-party platforms for seamless data flow and decision-making.

3. Underwriting and Risk Assessment Engine

An underwriting and risk assessment engine is designed to analyze the risks associated with the claim application using actuarial models, historical data, real-time data sources, and predictive analytics. Thus, it helps to make data-driven decisions and apply customized rules.

4. Billing and payment processing system

Billing and payment processing systems are a big part of overall insurance software development services that focus on building automated software that can manage the invoicing, multiple-channel payment acceptance, payment schedules, and reconciliation process. The software can also be integrated into the accounting software and compliance modules.

5. Customer self-service portals and mobile apps

Customer self-service portals are curated to help policyholders manage their policies, file claims, make payments, upload proof, and track the status of their claims without connecting to a human customer support agent. These portals are available around the clock, where the virtual assistants are always active to answer queries and take feedback.

6. Agent and broker management platforms

Agent and broker management platforms help to streamline commission tracking, onboarding, performance monitoring, and regulatory compliance management. These systems are capable of centralizing information like sales data, renewals, commissions, and lead allocation processes to provide easy and secure access to crucial information when required.

Custom Insurance Software vs Off-the-Shelf Solutions

When businesses look for insurance software development, they have mainly two options. The first one is custom insurance software in which a digital solution is curated from scratch according to personalized business requirements and preferences. The other one is an off-the-shelf solution, which is a ready-made software that can be customized according to business needs for quick deployment.

Both the choices for insurance software development services have their pros and cons.

Insurance Software Development Cost Breakdown in 2026

Generally, the cost to build an insurance software development ranges between $40,000-$300,000, the exact cost is influenced by a range of factors. It can include the project complexity, location of the development team, and development stages. At the same time, integrating advanced technologies like artificial intelligence, machine learning, and natural language processing can further elevate the cost.

Let’s break down the insurance software development cost based on different factors-

1. Cost Based on Project Complexity

• The complexity level of insurance software development highly influences the overall cost.
• The project with lower complexity and minimal features is less expensive, and thus the cost also falls around $30,000-$70,000.
• The moderately complex projects with certain integration and polished user experience generally range between $70,000-$125,000.
• Highly complex projects require the Industry 4.0 technologies, with strong security systems and automation capabilities. It requires more than $200,000 to build such apps.

2. Cost Breakdown By Development Stages

The insurance software development process comprises several stages, where each step consumes certain resources. The approximate cost breakdown on the basis of the development stage is as follows-

3. Cost Based on Location of Insurance Software Developers

It might sound vague, but the location of insurance software developers has a significant impact on the overall project cost. Hiring a developer from countries like the USA, UK, or Australia can cost you more than twice as much as hiring a team from India.

Step-by-Step Process of Insurance Software Development

The process to implement the insurance software can differ from one company to another according to their respective development methodology and preferences. However, the overall implementation process remains unchanged and goes as follows-

1. Requirement Analysis

This is the first step of the insurance software development process where the businesses have to identify their pain points, core challenges, and user needs. The identification of all these factors helps to weigh the efficiency of the software by the end of development.

2. Designing and Prototyping

Once the client is sure about the project goals and features, they partner with the right insurance software development company. The development partner builds a design prototype that offers an idea about features, design, and navigation. This prototype is approved by the client.

3. Core development

This is the most crucial phase of the software development process, where the entire frontend and backend of the software are curated. It also includes the data migration and integration to meet the compliance needs and security standards. The software is made functional at this step.

4. Quality Testing

As the name suggests, this phase is dedicated to performing the range quality tests to ensure that the final software doesn’t carry any errors or bugs. For the same, tests like unit testing, functional testing, security testing, etc., are carried out.

5. Deployment

This is the final stage where the software is deployed to the respective marketplace. It can be deployed on the Apple App Store, Google Play Store, or the internal tech ecosystem of the client organization. This step makes the software accessible to the target audience.

6. Change Management and Support

It has to be ensured that the stakeholders in the insurance company can use the new features and capabilities. For the same, a change management plan consisting of training sessions, gradual roll-out, etc., is implemented. The insurance software development company provides consistent maintenance and support to ensure the long-term operability of the software.

ROI of Insurance Software

According to the views shared by decision makers in the insurance industry, the software and AI solutions have showcased significant ROI after implementation. Here is a picture of how much ROI that insurance companies are leveraging through software development and AI implementation-

• Intelligent Analytics has been providing 300%-900% ROI to insurance businesses by helping them curate personalized insurance plans and make data-driven decisions.
• Most of the companies have reported 5-10% revenue increases within months of implementing advanced analytics.
• Software development has reportedly reduced 30% costs while AI integration further reduced the operational cost by 50-65%.
• Customized software has brought 15-20% improvement in loss ratio with 5% decrease in overall claim costs.
• The automation has also elevated underwriting efficiency with 25% reduced resource requirements.
• Fraud detection systems have reduced the fraud cases by 30%.

Here are the key metrics that most of the insurance companies use to calculate their ROI from software implementation-

• Operational Cost Reduction: Most of the insurance firms are based on the basis of reduced manual efforts for validation, intake, routing, and follow-ups.
• Claim Cycle Time: The decrease in claim cycle time also helps the companies to assess if the software implementation has accelerated the operational speed.
• Fraud Loss Prevention: The companies can simply assess the percentage of reduced fraud cases by the implementation of fraud detection systems.
• Underwriting Throughput: The time saved for the underwriter is also a key performance indicator for the insurance software designed for the same task.
• Customer Experience: Many companies rely on improved CSAT and NPS scores, retention rates, and compliance alignment to calculate the ROI.

Why Choose NineHertz for Insurance Software Development Services?

As interpreted in the above section, it is highly important to choose the right insurance software development company for your project. The NineHertz carries an experience of 15+ years in building FinTech solutions. We have partnered with the insurance firms globally to help them digitize their operations and multiply their revenue.

Here are some of the reasons that many insurance brands trust us for their technical needs:

1. Domain Expertise

We work with domain-specific experts who help us understand the key challenges, gaps, and opportunities in the particular industry. Thus, our developers build the solutionsaccordingy to the real-time needs of companies and end-users.

2. Free Consultation

The NineHertz focuses on establishing a strong foundation for the project. Thus, we provide a free consultation to understand key business requirements, features, and give the right guidance on the software development. We also commit to the budget and timeline and stick to it.

3. Least Time-to-Market

Our team of insurance software developers deploys the agile project management methodology that helps to build the software in less time. The development approach ensures not to compromise on the quality of the final output i, irrespective of the short timeline.

4. Non-disclosure Agreement

We prioritize the data safety of our clients and their projects. Therefore, we keep the non-disclosure agreement (NDA) at the center of the development process. It ensures that any information related to the project or client is kept confidential between the concerned parties.

5. Continuous Support

Our team promises the long-term performance of the software. So, we provide the post-deployment maintenance and support in which our developers consistently monitor the software performance, add new features, remove bugs or errors, and provide periodic updates.

Conclusion

Digitizing the operations in the insurance industry is no longer an option but a necessity to grow sustainably. It helps to reduce claim settlement cycles, curate personalized policies, analyze proof of incidents, automate underwriting, and much more. When estimating the cost of custom insurance software development, the ROI has always been more significant for such software.

If you are also looking to build an insurance software, fill out the contact form or reach out to our team via. Get a free consultation and make an informed decision at [email protected].

FAQs

1. How can insurance companies use software or AI agents for claims and underwriting?

The smart AI software and agents help to manage intake and validate documents, aggregate data risks, check coverage, and route the cases according to their respective niche and complexity. Thus, it reduces the workload for human employees while also eliminating the chances of errors.

2. Does insurance software development provide a good ROI?

Yes, custom insurance software has been consistently delivering a good ROI. They have increased revenue by 5-10% while intelligent analytics offer 3000-900% ROI to insurance companies.

3. How much does it cost to build insurance software?

It costs anywhere between $40,000-$300,000 to build the customized insurance software. However, the exact development cost is highly influenced by a range of factors like project complexity, development timeline, location of developers, technology stack, and more.

4. What are the features that should be imparted to insurance software?

The insurance software must contain features like an admin panel, quote & filters, policy details, payment gateway, claim filing, customer support, document upload and storage, push notification, etc.