At Cake & Arrow, we’ve had a front-row seat to the transformation happening in the insurance industry. We’ve observed how, despite significant investments in digital transformation over the last decade, many insurers are still struggling to deliver the kind of customer experiences that meet today’s expectations. It’s clear that while operational efficiency is important, it can’t come at the expense of the human touch that makes customer experience truly meaningful.
That’s why I sat down with our CEO and founder Josh Levine, who’s spent the last 20 years working with insurers to solve complex problems using human-centered design. He’s seen firsthand what’s working and what isn’t, and today, we’ll talk about why CX is still critical in insurance, what’s holding the industry back, and how companies can drive real progress in delivering exceptional customer experiences.
Emily: Before we dive in, Josh, can you tell us a little bit about Cake & Arrow, what we do, and how we got started working in the insurance industry?
Josh: Sure thing. Cake & Arrow started out as a design agency focused on creating better digital experiences, but over time, we saw a real opportunity in the insurance space. Insurance was lagging behind other industries in terms of customer experience, especially when it came to digital transformation. We realized that our human-centered design approach could help insurers improve how they interact with their customers—making the process simpler, more intuitive, and, ultimately, more human. That’s really been our mission since we got involved with the insurance industry.
So, over the past 20 years, we’ve zeroed in on this niche, working with carriers, distributors, and insurtechs—researching and understanding customer and internal user behaviors and creating better experiences across the board, from policyholder interfaces to internal employee tools.
Our sweet spot is that we have deep expertise in both human-centered design and the insurance industry. That combination allows us to make buying, selling, and servicing insurance better for everyone across the ecosystem. It’s a niche, but it’s incredibly gratifying because we know we’re solving real problems and helping bridge the gap between insurers and the people they serve.
Emily: It really is an important mission. Insurance touches all of our lives, whether we work in the industry or not.
The state of insurance CX today
Emily: Given the time you’ve spent working with insurance, what changes have you seen in customer experience over the years?
Josh: That’s a great question. Since we started working in this industry, we’ve definitely seen some significant CX improvements, but it’s been a gradual evolution. Early on, insurers were really behind the curve. Most of the interactions were still paper-based or handled through agents, and there was a lot of frustration from customers around how complex and outdated the processes were.
One of the biggest catalysts for change was COVID-19. Almost overnight, insurers were forced to adapt to a world where in-person interactions weren’t possible. That really accelerated the push toward digitization—self-service portals, mobile apps, and digital claims processing became critical. Companies had no choice but to make it easier for customers to engage remotely. It was a wake-up call for a lot of insurers. It showed just how important a seamless digital experience is, not just for convenience but as a core part of delivering service.
That said, while there’s been improvement, many companies are still too focused on technology and not enough on human-centered design. Digital doesn’t always equal better. Some of the early efforts were more about checking the box on being “digital” without really considering what makes a good experience for the customer.
It’s progress, but there’s still a long way to go.
Emily: Right –and still, despite all this progress, it feels like insurers still struggle with the basics. Why is that?
Josh: Exactly. The reality is that many insurers are still struggling with the fundamentals. Customer satisfaction has never been super high in insurance, and that gap between expectations and reality hasn’t really closed. People expect more responsive and personalized service, and when they don’t get it, it shows in customer loyalty—or the lack of it.
Emily: So what’s holding the insurance industry back from delivering better CX?
Josh: One of the biggest challenges is the complexity of the product itself. Insurance isn’t something people engage with regularly, and it’s inherently complicated—dense policies,lots of moving parts, and the industry is heavily regulated. All of this creates friction for customers. Even when companies want to improve CX, simplifying something as complex as insurance isn’t easy.
Another issue is the reliance on legacy systems. Many insurers are still operating on tech stacks that are ancient by today’s standards. These old systems make it tough to implement more customer-friendly solutions. For instance, trying to launch a streamlined digital claims process or personalized policy management tool can be nearly impossible when you’re dealing with siloed data and outdated infrastructure. Until insurers address these backend challenges, their ability to improve CX will be limited.
There’s also a cultural piece here. Insurance is naturally risk-averse, and that cautious mindset can make it harder to drive innovation in CX. Unlike more consumer-driven industries like retail or hospitality, insurance companies tend to be slower to adopt new approaches because there’s often more at stake—both financially and reputationally. So even if there’s a willingness to invest, there’s often a hesitation to experiment or take bold steps.
Overall, insurers still need to shift their mindsets a bit. Historically, CX hasn’t always been at the center of its strategy. A lot of the focus has been on underwriting, pricing, and risk management—areas that directly impact the bottom line. They often overlook how CX can also drive growth and loyalty. The companies that recognize CX as a strategic differentiator are the ones that will stand out, but that shift in thinking is still in progress for many.
Emily: Right. That mindset shift is so key. I know you talk about that a lot.
Digitization vs CX
Emily: Earlier, you made what I think is such a salient point that is often lost on insurers about the difference between digitization and CX. Can you unpack that a bit?
Josh: We often hear “digital transformation” and “customer experience” used almost interchangeably, but there’s a big difference between the two. Digitization is all about moving processes online—whether it’s offering a mobile app, automating claims, or creating self-service options. It’s focused on making things more efficient through technology. But customer experience (CX) goes deeper—it’s about how customers feel at every stage of their journey, from buying a policy to filing a claim.
Where insurance companies sometimes go wrong is thinking that just because they’ve digitized a process, they’ve improved CX. Not always. There’s this tension between digitization and humanization. Sure, digital tools like chatbots or self-service portals are convenient, but they don’t always meet the need for a more human, emotional connection—especially in stressful moments like filing a claim after an accident or other major event. The key is knowing when to bring in the human element.
For example, digitizing basic policy management is great—people want to handle simple tasks like updating their information on their own. But when something emotional or stressful happens, like when a customer has to file a big claim, they want empathy, reassurance, and a person to guide them through the process. If your digital tools don’t allow for that, it can lead to frustration, even if the tech itself is functioning well.
Cake & Arrow emphasizes human-centered design because it’s not just about being digital—it’s about blending automation with human interaction. The companies that get this right are the ones that use digital tools to enhance, not replace, the personal touch. Digitization should make the overall experience smoother and more intuitive, but it should also allow space for real connection at key moments. That’s what creates a truly great customer experience.
Emily: Interesting. I’m curious—do you think the push for digitization that we’ve seen in recent years has had any downsides?
Josh: That’s a great question. I think the push has mostly been positive—the industry really needed to get with the times, but like anything, there are definitely downsides, and these have less to do with digitization itself and more to do with how it’s often approached.
In the rush to go digital, a lot of insurers have been laser-focused on cutting costs and tightening operations, which makes sense in today’s economic climate. But here’s the tricky part: you can’t sacrifice customer experience in the name of efficiency. If you cut corners on CX, you might save in the short term, but you’ll lose customers down the road.
Many companies have rolled out digital tools that are more about speed and cost savings than really thinking through the customer journey. For example, self-service portals or automated systems can be convenient, but if they’re clunky, hard to navigate, or don’t complement human touchpoints, they end up frustrating customers more than helping them.
And in insurance, where customers often need reassurance and support when they’re doing things like filing a claim—purely digital solutions can feel cold and detached.
It’s really about finding that sweet spot where you’re both efficient and delivering a great experience. That’s not easy. Design can bridge that gap. Digitization is necessary, but it needs to be thoughtfully integrated into the overall CX strategy. The companies that do this well balance digital convenience with human empathy.
Who is the insurance customer today?
Emily: So, maybe a dumb question but also an important one because I think there really is some confusion here that gets at some of this murkiness around CX and digital transformation… Who is the “customer” in insurance today? It’s not always straightforward, right?
Josh: Great question. It’s a puzzle, really. The “customer” can vary so much depending on the product. You’ve obviously got individual policyholders, like people looking for home or auto coverage. But then for some LOBs your buyer is a business or employer, which adds even more layers—think about business owners, HR teams, brokers, and so on. In these cases, the “customer” could be anyone from a CEO managing risk to an HR manager handling employee benefits.
And your “customer” can change as you move through the product or service ecosystem. It could be an individual policyholder one moment, and then a broker or agent managing multiple clients the next. In many cases, it’s all of the above, and their experiences are interconnected. We have to design for the entire ecosystem, not just the end policyholder.That’s what makes this industry so complex and, from the perspective of designers looking to solve tough problems, so interesting to work in.
Emily: That interconnectedness really does make things complex. How does employee experience play into all this?
Josh: It’s huge. The relationship between employee experience and customer experience is integral to the value prop of insurance. If employees are disengaged or working with outdated tools, that’s going to show in how they treat customers. A happy, well-supported employee is much more likely to deliver a great experience. Investing in employee experience is often overlooked, but it’s one of the best ways to boost customer satisfaction in a service-driven industry like insurance.
Insurance is a highly service-driven industry. Customers interact with agents, claims adjusters, customer service reps, and brokers, all of whom are employees representing the company. If those employees are frustrated, disconnected, or using outdated systems, it’s going to reflect in the way they interact with customers. You can’t expect disengaged employees to provide an exceptional customer experience.
On the other hand, when employees are engaged, well-equipped, and feel empowered in their roles, it directly impacts how they treat customers. A positive employee experience—where people feel supported, have access to efficient technology, and aren’t bogged down by clunky processes—means employees can focus on delivering excellent service. That might be helping a policyholder understand their coverage, assisting with a claim, or resolving an issue quickly and empathetically.
It’s often overlooked, but investing in employee experience is one of the best ways to boost customer satisfaction. And that’s especially critical in insurance, where customers are often dealing with high-stress situations like accidents or natural disasters. They want to interact with someone who’s confident, responsive, and empathetic—not someone who’s struggling with internal systems or feeling unsupported.
So, really, by designing tools, processes, and environments that make it easier for employees to do their jobs well, you’re automatically improving the experience for the customer. Happy, supported employees lead to happy, supported customers. It’s all connected.
Does CX still matter?
Emily: You alluded earlier to this idea that the industry has been focusing more on operational efficiency than customer experience lately. Do you think CX still holds as much weight as it used to?
Josh: That’s a great question. I’m biased, of course, but I do think CX still holds as much weight as it used to—if not more.
Insurance is a tough market to stand out in—it’s not like buying shoes online, where you can switch brands easily. People don’t want to think about their insurance until something goes wrong, like a claim, and that’s where CX plays a huge role. If you can provide a smooth, empathetic experience during those key moments, it can make all the difference. But here’s the risk—if insurers focus too much on efficiency or cost-cutting and neglect CX, they might be saving money in the short term, but they’re likely losing customers in the long run.
So while it might seem like CX has taken a backseat to operational efficiency, it remains incredibly important. In fact, I’d argue that companies who invest in CX will have a competitive edge in the long run. Even as insurers push to be more efficient, they need to make sure they’re not cutting corners on the experience side. It’s about finding that balance where you can optimize your operations but still deliver a seamless, human-centered experience for customers.
The companies that will thrive are the ones that understand CX is an investment, not a cost. Even small improvements—like better communication during the claims process, or simplifying policy management—can go a long way in retaining customers and building loyalty. So, yes, CX is just as important, if not more so, especially when the margins between competitors are so thin.
At the end of the day, insurance is about trust, and price alone doesn’t build that. It’s the experience—the way you handle those critical moments—that keeps people loyal. Focusing only on operational efficiency or cost-cutting risks turning insurance into a commodity, where price is the only differentiator. But companies that invest in CX will find themselves building stronger relationships and long-term loyalty, which is far more valuable than a short-term cost-saving strategy.
The impact of AI on insurance CX
Emily: Let’s talk about the elephant in every room these days. AI. How do you see it influencing the future of CX in insurance?
Josh: AI and automation have been present in the insurance industry for a while now, but the kind of AI we’ve seen in the past has mostly been rule-based and focused on efficiency. Think of chatbots that can answer simple, pre-programmed questions, automated workflows to process claims faster, or algorithms that assess risk for underwriting. These tools have been useful in speeding up processes and reducing operational costs, but they’ve had limitations—especially when it comes to handling more complex or nuanced customer interactions. Often, these systems feel rigid and can frustrate customers because they can’t deviate from their script or handle edge cases well.
What’s exciting about the newer AI capabilities, particularly with large language models (LLMs) like GPT, is that they’re a lot more sophisticated. LLMs can understand and generate human-like language, which opens up entirely new possibilities for customer experience. Instead of just handling simple tasks, these models can engage in more meaningful conversations, comprehend complex questions, and even offer tailored recommendations. They’re capable of providing much more context-aware responses, which makes interactions feel less like you’re talking to a machine and more like you’re getting personalized help.
For example, an AI-driven virtual assistant powered by an LLM can help customers navigate a claim in real-time, asking clarifying questions, pulling up relevant policy details, and even providing empathy in a way that feels more natural than past automated systems. These models can also be trained to handle complex scenarios, like interpreting the fine print of policies or guiding users through intricate processes, which older chatbots or rule-based systems just couldn’t do.
But with these new capabilities come new responsibilities. While LLMs can provide more advanced support, they also carry risks if not used carefully. Miscommunications or generating incorrect information could erode trust, especially if customers rely too heavily on AI for sensitive decisions. And again, there’s that balance—just because an AI can do more doesn’t mean it should replace human agents entirely. The key is using AI to enhance the experience, making processes smoother and more personalized while still ensuring there’s a human there when empathy or complex decision-making is needed.
So, the shift from rule-based automation to more intelligent, conversational AI powered by LLMs is a huge leap forward, but companies will need to be thoughtful about how they implement it. Done right, it can significantly improve CX by offering customers faster, more personalized, and more engaging interactions. But if misused, it could lead to the same frustrations we saw with the earlier generations of AI.
The Future of CX in Insurance
Emily: So, what’s some low-hanging fruit in CX for insurance companies? Where could they make the biggest impact?
Josh: Improving CX doesn’t have to mean huge investments or overhauls. A lot of the work we’ve done with insurance clients shows that small, targeted changes can make a big difference, especially when it comes to the claims process. Claims, hands down, are where customers are really paying attention. It’s the moment of truth for insurers because a bad claims experience is one of the main reasons people switch providers. If the process is slow, confusing, or lacks empathy, it can erode trust almost immediately.
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We’ve seen firsthand that making claims smoother, more transparent, and more empathetic is key. Simple adjustments—like improving communication, providing real-time updates, or offering clear next steps—can turn what might be a stressful moment into one that reassures the customer. People want to feel supported when they’re filing a claim, and they don’t want to be left in the dark. By making the claims process easier to navigate and more customer-friendly, insurers can retain loyalty and keep customers happy.
In some of the projects we’ve worked on, we helped insurers automate parts of the claims process while still maintaining a human touch. By streamlining updates and ensuring clarity, we’ve seen major improvements in customer satisfaction without needing to completely overhaul the system.
While claims are the most critical, other areas like simplifying communication across all touchpoints or enhancing self-service tools can also have a significant impact. But claims—get that right, and you’ve built a strong foundation of trust that can carry over to the entire customer relationship.
In the end, it’s about making the process feel smooth and transparent, so customers feel like the insurer is on their side. Focus on claims, and everything else becomes easier to improve.
Emily: We discussed earlier how we’ve seen so much investment over the last decade or two in digital transformation and CX and now a lot of headway. Why do you think this is, and for companies who do want to really invest in CX, what can they do to ensure their investments actually move the needle?
Josh: That’s a great question, and to start, let’s be clear on what we mean by risk here. We all know that significant investments are allocated to digital initiatives aimed at enhancing customer experiences, streamlining operations, and staying competitive. But the reality is that seeing real results from those investments is far from guaranteed. In fact, close to 70% of digital transformation initiatives fall short, failing to achieve the anticipated performance and profitability gains. So introducing new digital products to the market can be a risky endeavor.
We’ve been at this for a while now, working with a variety of insurance companies, and what we’ve found are clear patterns that tend to lead to unsuccessful digital projects. Typically, one of the core issues is that product or development teams jump straight to the technology without considering the people they’re actually building the products for. There’s this rush to start with tech—new systems, new platforms—without first understanding the real problems that need solving for customers and agents. And when that happens, digital products tend to miss the mark. They don’t resonate with the people using them, and the result is poor ROI and a widening gap between customer expectations and the industry’s ability to meet them.
This is where the true value of human-centered design comes into play. It’s a proven way to mitigate these risks and significantly increase the likelihood of success. And there are a few ways that happens.
First, it starts with early discovery and design research. This is where we develop a deep understanding of customers’ or agents’ real needs, behaviors, and pain points. Armed with those insights, we can direct digital investments toward solving actual problems that matter to people. This reduces the risk of investing in solutions that ultimately don’t resonate.
Then, through iterative design and validation, we test our concepts early with target users. By gathering feedback and making adjustments before anything substantial is built, we can identify potential issues quickly. It’s much cheaper and faster to make changes early in the process than it is to fix problems after something is already built. This avoids taking on unnecessary technical and design debt.
Design also serves as a critical bridge between business strategy and technical execution. It fosters collaboration across functions—balancing business objectives with user needs. This ensures that the solutions we implement not only have a positive business impact but also genuinely matter to the end users.
And here’s the key: human-centered design isn’t just something you do in the early phases. Its real impact comes when it’s applied at the organizational and cultural level. This concept of continuous discovery—where you constantly infuse customer feedback into product decisions throughout the lifecycle—helps ensure sustainable growth over time and keeps up with rapidly changing customer expectations.
Ironically, the insurance industry, which is built on mitigating risk and safeguarding investments for others, sometimes overlooks applying those same principles to its own digital product development. We have these tools at our disposal—human-centered design, early discovery, and continuous feedback—to increase our odds of success. But the reality is, this approach isn’t yet ingrained in the industry’s DNA.
For insurers that want to truly move the needle on CX, it’s about embracing this mindset. It’s about understanding the customer first, investing in the right places, testing early, and continuously adapting based on real feedback. That’s what will help companies avoid the pitfalls of past digital transformations and ensure their investments deliver real results.
Emily: I think that’s a great place to wrap things up.
One final question: In a few sentences: what does the future of CX in insurance look like to you?
Josh: The future of CX in insurance is all about balance—leveraging technology to streamline processes and make things more efficient while still maintaining that human touch where it matters most. We’ll see more personalization and more seamless digital experiences, but also a recognition that people still want empathy and support, especially during critical moments like claims. The companies that can integrate AI and automation thoughtfully, while staying connected to their customers’ real needs, will stand out. Ultimately, the future of CX in insurance is about making the complex feel simple, the impersonal feel human, and creating relationships built on trust and transparency.
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by Emily Smith Cardineau
