View from the top: Spike Lipkin, Newfront

Prior to co-founding Newfront in 2017, CEO Spike Lipkin handled insurance purchasing for other entities he was involved with during his time at Blackstone Inc. and Opendoor Technologies Inc. Looking to improve the insurance purchasing process, he established the San Francisco-based brokerage using technology designed to reduce the amount of paperwork needed and streamline the placement of coverage. Newfront significantly expanded its operations through its 2021 merger with established broker ABD Insurance and Financial Services Inc. Newfront has recently hired several well-known brokers, including former Marsh LLC veteran John Newell. Business Insurance Editor Gavin Souter recently spoke with Mr. Lipkin about the company’s expansion and its plans.

Q: Newfront has made several high-profile hires over the past few months. What does this mean for your strategy?

A: It’s a very strong validation of our strategy; our strategy hasn’t changed. We believe that our industry is changing, and clients are going to demand a more analytical, transparent and data-driven option. We’ve now spent six years building a high-tech and high-touch experience, and those recent hires that have joined us are people who are voting with their feet, saying, “This is the best place to build an insurance career because I have the right tools to deliver the best client experience.” 

Q: But why were you pursuing them? What is it that you wanted to bring into the company?

A: We pursued them because they are the elite talent in the industry. These are folks that every firm is pursuing. … National expansion is something that’s very important to us, and so bringing in John Newell to lead our expansion and to lead our scaling was a big part of that. We’ve made some high-profile hires outside of California. We brought on a team in Boston; we brought on someone to lead our Philadelphia market, our Pittsburgh market; we’re growing our New York presence as well. Chicago is an area where we’re investing, and Texas. So, we’re taking what has worked really well and expanding it across the country. 

Q: With all this activity, where do you see opportunities for growth?

A: We’re at the most fascinating time. We are increasingly living in a world that is risky. There are new vectors of risks and there are also more perils out there, and those are happening more frequently — natural disasters, pandemics — so the need for what brokers do is increasingly more significant. If you are an innovative broker who can bring a digital experience to clients, you are also well matched for the new digital era where clients have unique risks. If technology is remaking every company, we’re going to see whole new markets within insurance develop. 

We’re at the beginning of an AI revolution, and that’s going to change everything for clients, and it’s going to change how brokerages operate. If you think about brokerages, there’s this huge transactional component. You have skilled professionals that have spent decades becoming experts in this business, and some of what they do is this really valuable client-facing work, but a lot of what they do is packaging of information, filling out forms, spending their days toiling away on this work, and I think that’s going to change. 

Q: How do you think artificial intelligence is going to change the process?

A: It is going to eliminate the bottom half of what professionals do. On one end of the spectrum, you have really valuable client-facing work, on the other end you have transactional work. Technology will increasingly take on the transactional work, and that will mean that professionals can have more meaningful relationships with their clients, more strategic relationships with their clients.

It also means that if you take the transactional work and digitize it, all of the data associated with the transaction suddenly becomes structured — insights, benchmarking, forecasting — and these things that today are really laborious and make sense for a client of a certain size are suddenly going to be broadly available. So, you’re going to see this democratization of really good decision-making that AI is going to power.

Q: AI is also raising fears among people that their jobs may disappear. Where do you see that happening in the insurance sector?

A: We believe fundamentally that if you’re a CFO or a general counsel and you’re making large or middle-market insurance decisions, a human is always going to be an important part of that, but there’s technology that will empower that human. When you look at other industries, the story is very different. We’ve all read these statistics about AI eliminating jobs, and I unfortunately think that will happen and it will change the risk profile in many of these industries. So, insurance brokers who are highly adaptable and understand the changing market will be well-suited.

Q: Last year, you raised $200 million. Any acquisitions on the horizon?

A: We see massive opportunities for organic growth in front of us and so we don’t have any plans to acquire other companies. We are focused on building the tools and culture to be the destination for top talent in our industry. … We’re not planning to acquire; we’re planning to build.

Q: Are there any product areas or industry verticals that you’re looking to expand into?

A: We will always be strong in our core verticals around technology, life science, financial institutions, but recently we’ve made some meaningful investments in real estate. So, we brought on Jonathan Naranjo in the past year and built out a team. In construction we brought on Matt Summers to lead our construction practice and then a whole host of other verticals.

If you start with technology, you can find a path into almost any industry. So, we work with telehealth companies and that’s a really good foray into health care because it turns out that every health care company is becoming a digital health company. The same is true in construction. These buildings are becoming more and more sophisticated, the technologies used to build are becoming more and more sophisticated. So, we think technology is going to touch every industry, and our core foundation in technology will lead us into many other industries.