This represents a shift from our perception of what we need as an insurance company: "I can underwrite $X in this risk profile," to "I have a customer who needs insurance, can I meet his or her needs?" And from anticipating the value of a long-term relationship with a customer and anticipating what they may need in the future: "[My customer] just bought a home and is expecting their first child."

The unfortunate part is that pretty much every company, regardless of industry, now says they are "customer-centric." The problem is that few companies have a really good handle on what that means because customer-centricity can encompass so many capabilities. Most simply, customer-centric companies put their customer at the center of their business, not their products or channels. This means that we anticipate and understand our customers' needs and respond to those needs in a way that's convenient to them. Customer-centric companies don't think about customers in terms of a single transaction or a unit of risk, but a series of meaningful interactions (the customer experience) over a period of time.

In the insurance industry, many companies are still hampered by product and functional silos that inhibit understanding this customer journey. Every insurer's back-end technology infrastructure includes a tangled web of legacy administration systems (and spreadsheets), and many companies have made big investments to modernize those systems to increase operational efficiency. We've also seen huge investments in customer relationship management (CRM) capabilities in the past few years, but most CRM systems are not integrated well with the other decision-making engines within the business, and we still end up making risk decisions independently from customer decisions.

Why? We're still going off of 200 years of insurance industry heritage: We often see our customers in terms of risks, policies and transactions, not people with distinct needs or wants. The question is: How do we start to think about bridging the gap between risk and customer engagement?

Next page: Three ways to bridge the gap.

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1. Align your risk tolerance with your customer segments. Break your risk tolerance down to the customer-segment level. Not all customers look alike, and they will respond differently based on their needs and their channel preferences. Many companies use rules-based segmentation techniques today (for example, women age 25 to 35, living in urban areas), which is a good starting point. Consider layering in predictive segmentation to anticipate customer behavior and preferences.

As an example, one insurance company began to build predictive segments around which customers were likely to renew their policies. They uncovered several different distinct populations of potentially valuable customers with a high attrition risk. They started to evaluate the customer journey and discovered that they weren't having a conversation about renewal until the end of the policy period: After the customer had already made the decision to switch insurers. They created a cross-channel interaction strategy for that group of high potential customers to engage with them throughout the lifecycle.

2. Turn your segments into personas: A persona is simply a hypothetical person that embodies the attributes of your segment. This is a much more powerful and personal way to represent your customers internally as you develop your strategy. It's easier for people to relate to "Jane" than "high-value, high-risk, mid-career females segment No. 10."

3. Craft your cross-functional strategy. Now that you're oriented to the customer point of view, start aligning your underwriting and channel strategies. Organizationally, this is one of the most challenging aspects of the customer-centric evolution. Most companies are aligned by product or channel, each with their own profit targets, marketing and contact strategies. Having the tough conversations about coordinating cross-product underwriting needs with customer personas across their lifecycle is critical.

Being serious about customer-centricity means being serious about organizational transformation. You have to break down the product and functional silos. Reevaluate your go-to market and customer-servicing strategy, and refocus analytic capabilities to understand who your customers are and what they need.

Rachel Alt-Simmons is a principal industry consultant for financial services at Cary, N.C.-based business analytics software and services company SAS. Previously, she drove enterprise analytic capabilities at Travelers and Hartford Life, and was research director for Life and Annuity at research firm TowerGroup.