A blade-shaped cutting insert has opposing first and second insert side surfaces with a peripheral surface extending therebetween, and a first cutting portion having a first primary cutting edge extending between the first and second insert side surfaces, defining a maximum insert width of the cutting insert. The peripheral surface includes an upper surface and first and second diverging flank surfaces bisected by a first plane transverse to the upper surface. The cutting insert has a maximum insert length measured perpendicular to the first plane which is more than sixteen times greater than the maximum insert width, and a maximum insert height measured parallel to the first plane which is more than ten times greater than the maximum insert width. The cutting insert is removably secured in an insert receiving pocket of a tool holder, which is defined by an upper clamping jaw and a lower clamping jaw.