VIEWPOINT

2024

U N D E R S TA N D I N G K E Y
CUSTOMER- CENTRICIT Y
TRENDS IN INSURANCE
Putting customers front & centeris the way forward for insurers

AUTHORS
José González

Insurers spent years developing a deep

Jiri Steifunderstanding of each risk type and creating

Yoshiro Makita

precise business models to optimize their earnings,
including operating models for each line of business.

Borja de la Cuesta

Unfortunately, this model is not conducive to

Cristina Vilaserving today’s customers, who desire the seamless,Marta Perez

digital-based service they experience in their othertransactions. In this Viewpoint, we outline the best
way for insurers to shift from a traditional model toa customer-centric one.

Alejandro Andreu

ARTHUR D. LITTLE

VIEWPOINT

Today’s customers have high expectations. Rightfor profitable growth. Nevertheless, insurers facefrom their smartphone, they can purchase any

significant challenges, including technology

item quickly, access their bank accounts, arrange

platforms designed with policy-centric processes,

transportation, and book a healthcare visit. Theysiloed customer data hindering personalization

expect the same from their insurance company

and cross-selling, independent communications

but are often disappointed. Customers wantchannels that impede omnichannel relationships,

to use their phone to purchase insurance andand limited coordination and differing strategies

also have the ability to file a claim and modify

within their organizations (mostly between sales,

their policy from that device. In fact, they desire

technical, and operations teams). Usually, thisseamless communications with their insurer via

comes from varied understandings/views of the

all digital channels, including email, voice calls,

customers across different teams. Insurers alsochat, and social media.

struggle to measure their baseline in customer
centricity (i.e., how they compare with their peers

Agents and brokers are another key set ofand how to measure improvement over time).

stakeholders for many insurers. They are the ones
with more intimacy and knowledge related tocustomers and thus play a vital role in personalizing
the insurer experience. Agents and brokers are
increasingly asking for more options and tools to

S TAR T WITH CUS TOMERSEGMENTATION
Insurers should start understanding how toprovide customer-centric service (e.g., to improveadvisory capabilities or to provide specific discounts
in cross-sell policies and more involvement inrenewal-price calculations and claims processing).
Finally, insurers are willing to increase the size andprofitability of their portfolios. The rising price war
in mature markets and lines of business such as
automotive and the ever increase of the combined
ratio are putting more pressure on their businessmodels. Customer centricity, which allows insurers
to focus on more profitable, loyal, and better-segment the customer. The value that insurance
customers bring is by no means equal. In our
experience, 10%-20% of customers constitute
90% of a business’s value, while 5%-20% destroy
up to 40% of total value (see Figure 1). This leads toa significant opportunity: segment customers, gain
a comprehensive understanding of each segment’s
behavior, and use those insights to manage yourbusiness. In other words, create a business modelthat helps you focus your resources on the mostprofitable customers while developing initiatives

to identify and convert high-potential customers.
Figure 1. Customer segmentation based on value
protected customers, offers a unique opportunity

Figure 1. Customer segmentation based on value
10%-20%30%-40%20,0%High-value customers

Value customers(10%-20%)••••

Very high profitability
Long-standing customers
High product tenancy (>2)
Low turnover90%

of total value

Loyalty bydifferential service

High profitability
Long-standing customers
Medium product tenancy
Low turnover

100%(40%-65%)

•
•
•
•

30%

of total value

Positive-result impact
Single product
Prone to insurer change
Medium turnover

20%

of total value

Cross-selling & customer experience

Number ofcustomers

Negative customers

Positive customers(10%-30%)••••

80%-95%•••••Loss-making customers
Price seekers
High-risk customers
Fraud cases
High voluntary orforced turnover-40%

of total value

Customerselection

Source: Arthur D. Little

UNDERSTANDING KEY CUSTOMER-CENTRICITY TRENDS IN INSURANCE

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ARTHUR D. LITTLE

VIEWPOINT

VA L U E T H AT I N S U R A N C E
CUSTOMERS BRING IS
BY NO ME ANS EQUAL

1. Design a distinctive, shared,
customer-centric strategy
More advanced customer-centric insurers
stand out due to their shared strategy. They
go well beyond the classical insurance product

The segmentation should be clear, easy tounderstand, and enable a customized value
proposition tailored to specific customer needs.
A first approach might be based on producttenancy and incorporating behavioral elements
when the organization is ready. Productconfiguration can be tailored to customer
segments or include flexibility to leverage newsales initiatives, portfolio defense assured sums,

value proposition to build an ecosystemapproach where the customer also accesses
complementary services (e.g., Vitality in the
UK and Helvetia in Switzerland). The value
proposition also incentivizes cross-selling (e.g.,with personalized prices for cross-sell products
or better service commitments). Another trend invalue proposition is including prevention services
so the insurer is no longer just a claims payer but

exclusions, or underwriting rules. Agents should

evolves into a risk management partner.

be able to focus on specific segments to improve

Distribution and servicing channels are alsoboth the advice they give to customers and theaffected by a customer-centric strategy. Traditionaloverall customer experience.

agents and broker channels are mostly impacted

BUILD A CUS TOMERCENTRIC VISION

by digitalization that supports a more personalized
advisory, captures customer data (that otherwise
would be only available for the distributor), andenables personalized cross-selling (e.g., via

Insurers must change the way they work bypropensity models or the use of Microsoft or Google

evolving from product-oriented organizations

videoconferencing tools). Remote channels, which

into customer-centric businesses.

started with the traditional call center, now include

Figure 2 highlights six elements insurers needto make that transition successfully.

Figure 2. Customer-centric building blocks

new digital channels (e.g., apps and Web) and social
networks (e.g., WhatsApp and Telegram) that allow
for more customer interaction. All these channels
require personalization. Advanced customer-centric
insurers excel in their ability to use customer datato personalize the entire value chain.

Figure 2. Customer-centric building blocks

Design a distinctive,
shared, customer-centric
strategy

01

04

Manage interactions withcustomers, agents & brokers

Drive cross-functional
collaboration & customer
leadership in org structure

02

05

Test, measure & improve,
focusing on relevant
customer interactions

Engage employees, agents& external partners

03

06

Personalize the experience
using customer analytics

Source: Arthur D. Little

UNDERSTANDING KEY CUSTOMER-CENTRICITY TRENDS IN INSURANCE

Source: Arthur D. Little

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ARTHUR D. LITTLE

VIEWPOINT

2. Drive cross-functional collaboration
To successfully shift to a customer-centricbusiness model, organizations must ensure
the relevance of the customer vision to
all departments. We recommend a crossfunctional steering committee dedicated tocreating a common vision of the client and a

ONE OF THE MOST
D I F F I C U LT L E V E R S
T O A P P LY I S A D A P T I N G
INTERNAL POLICIESTO FOSTER CUSTOMERCENTRICITY

detailed customer-centricity plan that includes
objectives, resource allocation, and an action
plan. Leaders must drive this customer-centric

To engage employees and agents, the first step

vision by aligning team incentives, creating

is to clearly communicate the relevance of thecross-functional project visibility, and building

customer vision, with a consistent storylineawareness through internal reporting.

shared by all executives, middle managers, andCustomer leadership can be under the tutelageof a functional leader reporting to the executive
committee or reporting directly to the CEO as aself-contained function. The first option requires
coordination with the functional leader todevelop the customer vision. The second option
conveys greater relevance of the customercentric approach to the organization and allows
for greater impact of initiatives.

key influencers. Then, they need specific training,
including formal training (reskilling) and on-thejob training (e.g., participating in cross-functional
projects or with job role rotation programs). Oneof the most difficult levers to apply is adaptinginternal policies to foster customer centricity,
including HR policies (using client KPIs in
the bonus calculation or in evaluating careerdevelopment) and agent management policies(e.g., extra commissions based on customer KPIs)

Client initiatives are mostly transversal to theand incorporating customer-experience KPIs inorganization, so they require alignment andday-to-day reports and processes.

teamwork. Thus, leading insurers develop across-direction operating model where different
organizations work together. These operating
models ensure that key employees can dedicate
their time to client projects and that incentives
align (e.g., employees with long-term assignment
to client projects might receive specific KPIs
for their annual bonuses), provide visibility
over transversal projects to ensure a smooth
implementation, and build awareness throughinternal reporting to all stakeholders.

To engage with external partners, client-based
KPIs are more commonly used in contracts andreporting. Leading insurers go the extra mile bydeveloping client-centric action plans with theirpartners, which might be co-financed, and bysignificantly linking a partner’s compensation
to the implementation of the client vision.
4. Manage interactions with customers,
agents & brokers
Traditionally, customer interaction management

3. Engage employees, agents &has taken place in silos. Each team for a given

external partners

insurer would optimize its part of the value chain,

Customer centricity calls for personalizationand excellence during all touchpoints of thecustomer experience. This is why customer
service employees (e.g., claims adjusters or phonethus creating suboptimal experiences (see Figure3). Agents and brokers also usually have misaligned
incentives (e.g., performance KPIs linked to policies/
premiums and not including customer KPIs).

representatives), agents, and sometimes external
partners (e.g., repair shop employees) must be
engaged in customer-centricity initiatives.

UNDERSTANDING KEY CUSTOMER-CENTRICITY TRENDS IN INSURANCE

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ARTHUR D. LITTLE

VIEWPOINT

Figure 3. Cross-functional customer management
Figure 3. Cross-functional customer management

Product/service
development

Distribution

Risk rating &underwriting

Policyadmin.

Claimsmanagement

Customer
retention/renewal

Reinsurance, investment management
Support functions (HR, finance, data analytics, management, etc.)

TRADITIONAL VISIONCUSTOMER-CENTRIC VISION
Siloed vision (vertical optimization in each functional area)

Transversal customer vision (end-to-end customer journeys
with functional-area aligment)

Business management centered on policy-based indicators

Relevance of customer-based indicators

Sales campaign by productCommercial activity based on customer needs (up/cross-selling,
personalized advisory)

No relevant customer functional area

Relevant customer functional areas to guarantee transversal
coordination

Source: Arthur D. Little

Source: Arthur D. Little

More advanced insurers can break those silos

such as online panels, focus groups, and “dayto build an integrated value chain aroundin the life of” profiles, along with enabling thethe customer. Different teams collaborate tosharing of information from quality teams (e.g.,understand customer pain points and createclaims and customer support), fraud control,

end-to-end customer journeys that balance theand the internal audit team. Each of thesedifferent trade-offs between teams (e.g., pricing,alternatives provides additional information

customer purchasing power, under insurance).

toward a comprehensive measurement of each

Next, they move toward providing omnichannel,

insurer’s situation.

consistent, and personalized customer experiences.
5. Test, measure & improve

Action, of course, must complement
measurement. The first tool to identify root
causes and solutions is a “close the loop”

Another challenge in customer centricity is thecall, where insurers actively ask customers

measurement of baseline, improvements, andfor more information about their experiences

benchmarking. Basic measurement KPIs, alreadyand expectations. A more advanced trend

widespread, are net promoter score (NPS —is the evolution toward the “test and learn”

transactional NPS for a given touchpoint andapproach, with an increasing use of pilots torelational NPS for the overall client relationship).

test improvements before including them in

Also widespread are quality KPIs (e.g., average

processes. This enables faster improvement.

time to pick up a phone call or to complete

These approaches are usually complemented

a claim). These provide part of the answer toby co-creation methodologies, which include

measurement.

the customer and agents in the development

Surveys often complement KPIs. These include
customer surveys (broken down by segment,
geography, line of business, product tenancy,etc.) and agent, broker, employee, and partnercompany surveys. More advanced insurers use
other customer research techniques as well,

UNDERSTANDING KEY CUSTOMER-CENTRICITY TRENDS IN INSURANCE

of solutions (e.g., via online panels, advisorycommittees, or design thinking tools). Other
sources for improvement ideas could comefrom external players; for example, by observing
best practices of competitors and collaboratingwith insurtechs and start-ups that have moredisruptive approaches.

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ARTHUR D. LITTLE

VIEWPOINT

6. Personalize the experience using
customer analytics
The personalization of services and products
requires a massive exploitation of customer data.
This brings two challenges: (1) developing therequired analytics capabilities and (2) deploying
the analytics capabilities in the businessprocesses.
1. Developing the required analytics
capabilities starts with identifying andprioritizing personalization use cases in an
implementation roadmap (usually by economic/
customer impact and by implementation
complexity). Then, working backward, you can:- Identify required and available customer- Define the legal model to support

personalization under a specific regulation(e.g., with GDPR, two key concepts are
privacy policy and processing underlegitimate interest and/or consent).

- Create an analytical team able to prepare
the models. The team should incorporate

diverse skills (e.g., data engineer, scientist,
translator).

- Develop the analytical platform with therequired functionalities.

2. Deploying the analytics capabilities in thebusiness process usually requires solving
the integration problems of different coresystems (e.g., life, non-life/savings platforms,

data. The usual challenges here are missing

retail, and corporate platforms) and the lackinformation (e.g., information not provided

of functionality (usually in the sales domain

by agents) and unconnected data silosof customer relationship management as(e.g., industry/product).

insurers are usually intermediated).

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ARTHUR D. LITTLE

VIEWPOINT

CONCLUSIONDRIVING CHANGEI N S U R E R S M U S T S U C C E S S F U L LY
TURN BUSINESS VERTICALS INTOA F U L LY I N T E G R AT E D VA L U E C H A I N

As customers’ expectations increase, insurers must successfully
turn business verticals into a fully integrated value chain focusedon customer segments. To drive real change, organizations should
integrate a customer-centric vision and adapt processes, tools,
and governance to ensure consistency and implementation. This
Viewpoint presented six elements that insurers should focus onas they transition to a customer-centric model:
1

Design a distinctive, shared, customer-centric strategy.

2

Drive cross-functional collaboration and customer leadershipin the organizational structure.

3

Engage employees, agents, and external partners.

4

Manage interactions with customers, agents, and brokers.

5

Test, measure, and improve, focusing on relevant customer
interactions.

6

Personalize the experience using customer analytics.

UNDERSTANDING KEY CUSTOMER-CENTRICITY TRENDS IN INSURANCE

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