What’s the quickest way to make a word sound more valuable? Slap “tech” on the end.
Proptech, blocktech, medtech, fintech — the list goes on and on. It’s exhausting, and it makes you wonder whether it’s all just a neverending cycle of hype.
It’s not all hype. But it’s important for consumers, investors, entrepreneurs, and everyone else to have a common understanding of what we mean when we talk about all these different “-tech” sectors.
For now, let’s focus on two you’ve probably heard of: healthtech and insurtech.
What’s the difference between healthtech and insurtech, and why should you care?
What Is Healthtech?
Healthtech is also commonly known as “digital health.” McKinsey defines it as “the application of digital technology to improve health or care delivery.”
Healthtech is a fast-growing technology sector that has drawn billions of dollars in early-stage capital since 2020. The space tends to attract high-profile, mission-driven investors like Bill and Melinda Gates, whose foundation is a major driver of tech-enabled healthcare innovation. It also appeals to lower-key investors like Kris Duggan, whose investment thesis focuses on healthtech’s potential to improve the lives of the world’s most vulnerable people.
Healthtech solutions tend to be software-based. They may use “traditional” programming or rely on cutting-edge machine learning and artificial intelligence platforms.
Confusingly, “healthtech” and “medtech” are two different things. “Medtech” refers to hardware-based solutions, often addressing specific medical conditions or needs. These include medical devices, implants, and over-the-horizon solutions like medical nanotechnology.
What Is Insurtech?
Like healthtech, insurtech is software-based and increasingly built on artificial intelligence platforms.
Unlike healthtech, insurtech doesn’t directly address the patient or provider experience. Insurtech solutions serve insurance companies and other stakeholders in the insurance industry.
They may help automate or simplify routine processes, saving time and money. Or they may help insurance professionals (including tech professionals working in the insurance industry) spot previously undiscovered patterns in customer or claim data. Many insurtech solutions aim to reduce waste, fraud, or bloat in the insurance industry, reducing costs for insurance companies and policyholders.
Healthtech vs. Insurtech Similarities
Let’s take a closer look at the main similarities between healthtech and insurtech:
- Both are software-based. Both sectors are built around software rather than hardware. As a result, early-stage healthtech and insurtech companies tend to have lower startup costs.
- Both may fit into the larger healthcare economy. Healthtech fits squarely within the broader healthcare industry. Insurtech often does as well because health insurance is one of the industry’s biggest subsets.
- Both focus on improving efficiency, driving down costs, and/or improving stakeholder experiences. Like most software-based solutions, healthtech and insurtech focus broadly on increasing efficiency and improving user experiences.
- Both attract lots of investment. This could always change, but it’s true right now. Early-stage and later-stage investors alike favor healthtech and insurtech solutions with clear value propositions. Of course, attracting lots of investment is no guarantee of success, and both sectors have a high startup failure rate.
Healthtech vs. Insurtech Differences
Healthtech and insurtech have some clear differences. These are the most important:
- Insurtech focuses on the insurance industry. By definition, insurtech focuses on the insurance industry. Many insurtech solutions are B2B, meaning they serve companies rather than individual policyholders or patients.
- Many insurtech solutions have nothing to do with healthcare. Health insurance is just one insurance subsector. Although many insurtech solutions relate to health insurance, many don’t.
- Insurtech often intersects with fintech. Insurtech and fintech are distinct sectors, but individual solutions may live in both worlds.
Changes to Come?
Like most other “-tech” sectors, healthtech and insurtech are both pretty young. They were much smaller 15 or 20 years ago and were basically unrecognizable from today.
They continue to change at a rapid pace. That’s welcome news for entrepreneurs and tech professionals who want to make a real difference in people’s lives. But it also requires those of us on the outside to pay close attention. Today’s healthtech and insurtech sectors might not resemble tomorrow’s.