How Needs-Based Segmentation Simplifies Insurance Decisions

Choosing the right insurance product can be a daunting task. With endless options and limited time and attention spans, customers can often struggle to pinpoint what truly suits them.

Understanding the reality of the situation, some insurers are deploying simple but effective strategies referred to as ‘needs-based segmentation’. Instead of overwhelming buyers with long feature lists, this approach starts with the customer’s needs, asking what they want from the insurance and stepping in when their needs don’t align with the product.

Aviva Protection UK: A Simple Question for Life Insurance

Life insurance is complex, and most people don’t like thinking about it. It’s more than just policies and premiums— it’s about protecting loved ones during life’s toughest moments, making it an emotional product from the outset.

It is therefore important that providers like Aviva Protection UK - who offer different types of life insurance - make the process of identifying the correct product clear and simple for the consumer. 

Aviva Protection UK has tackled this challenge by beginning their online journey with a straightforward question:

“Please select the statement which best describes your needs.”

By focusing on who their products are for, rather than overwhelming customers with jargon, Aviva Protection UK simplifies the process. 

This helps customers easily find the product that fits their financial goals, making recommendations clearer and more relevant. It also creates a more tailored experience, which can help build trust with the provider. 

Home Emergency: Asking Questions to Prevent Customers from Choosing the Wrong Products

Admiral takes a similar approach with home emergency cover. Instead of overwhelming consumers with lengthy policy descriptions, they ask two simple questions to determine the level of cover that suits each individual. 

After answering the questions, customers are told if the product is suitable for them. If they are suitable, the full product information is then displayed in a clear, visually engaging table with colour-coded ticks and crosses.

This reduces the cognitive effort required to compare complex policies. Customers can quickly learn if the policy being sold to them meets their requirements before fully investing their time into reading the policy details.

In the example below, Age Partnership makes customers declare the type and age of the boiler before adding the coverage. This is an easy way to make sure that customers are not buying inappropriate cover.

A needs-based segmentation approach is key for ancillary products like home emergency cover. With multiple add-ons available through a home insurance purchase journey, customers risk choosing extras without fully understanding the exclusions. 

Light, tailored questions create "positive friction" helping consumers think carefully about their needs. This ensures they select only relevant products, preventing unnecessary purchases while building trust, transparency, and a better overall customer experience.

Conclusion

Starting with a simple, targeted question reduces complexity, preventing customers from feeling overwhelmed by irrelevant options. By ensuring the product is suitable, insurers avoid burdening customers with unnecessary information, increasing the likelihood of an informed decision. These insights underscore the value of needs-based segmentation. 

Aviva Protection UK, Admiral and Age Partnership provide excellent examples of how needs-based segmentation can transform a complex purchase journey into a clear and reassuring process. 

By asking the right questions at the outset, these insurers simplify decision-making and guide customers towards products that best meet their requirements.

The key takeaway is simple: when you start with what the customer truly needs, the options become clear, decisions become easier, and trust is built from the very first interaction.