Newfront’s Spike Lipkin: AI is the first technology to touch “advisory side” of insurance

AI is the first technology to influence the “advisory side” of insurance rather than just streamlining a process, and that the insurtech’s use of technology “really shines” in RFPs, Newfront CEO Spike Lipkin believes.

Lipkin was speaking with The Insurer TV at this week’s RISKWORLD conference hosted by RIMS in San Diego, where he said Newfront’s conviction in AI “has only grown” a year after saying it posed a once in a generation opportunity to reshape an industry.

“When you think about the role of technology in our industry, if the prior generation of technology was about streamlining the transaction, I think the promise of AI is it's the first technology I've seen that actually touches the advisory side of the business,” Lipkin said this week.

“When you think about why we as brokers get paid, it's for providing advice. We also do a transaction and these AI models can read large numbers of documents, compare documents, [and] do things that touch that core advisory function,” he continued.

“So, our conviction [in AI] has only grown, we're seeing it in action. Our clients are using it, and we're really, really excited,” Lipkin said.

The insurtech co-founder also said the insurtech’s AI tools are helping it win RFPs.

“We're certainly winning business from all kinds of incumbents, and we find that once you have the right team, once you've checked the capabilities box, the technology really shines,” Lipkin said.

The executive emphasised the fact that technology won’t replace people – with the advisor remaining at the center of the industry – but that technology can help them make better decisions.

“They want to give their employees instant answers to questions, and they don't care that it's AI that's doing it,” Lipkin said of clients’ thinking.

“It might as well be a human for all they care about, but if AI can deliver these unique experiences, we do find that it leads to a higher win rate on closed business.

AI tools helping Newfront win business, attract talent

Lipkin said it’s “probably a challenge” for large incumbent firms founded on legacy infrastructure to deploy the latest advanced technology at scale the same way a firm such as his can, as he touted the elements that make Newfront unique as an insurtech and also a retailer.

“We're finding that we're winning relationships – really entrenched relationships – from incumbents in the middle market, upper-middle market, and some risk management accounts, and then the talent that's joining us,” he explained.

“People are leaving long careers – really established, successful careers – because they see a unique opportunity at Newfront, and both of those things are happening at an abnormally high rate for a firm our size,” he continued.

“We think we're on a great trajectory. We also think that there's demand in the market for a new solution,” he added.

“If you look at what many of our competitors offer, they have incredible people, but we think that pairing that with better tools to make decisions [and] better technology is the winning solution in the long run, and it's playing out in our results,” Lipkin said.

Specialisation strategy

Newfront’s strategy entails specialising in specific industry verticals, and after having success in tech and life sciences, the insurtech is now especially focused on construction.

Lipkin also acknowledged that the insurtech has tended to hire younger staff than can be found among its retail competitors.

“We've got a wide variety [of colleagues], but we've certainly been good at attracting earlier-career talent that, frankly, is frustrated with the way the industry is run today and wants a different model,” Lipkin explained.

To that end, Newfront has heavily focused on organic growth rather than M&A, a model that Lipkin said is a better use of the firm’s capital.

“We find it's much more effective to invest in teams and talent versus going out and buying businesses. And so, our entire focus is organic growth, and I don't see that changing for the foreseeable future,” he commented.

Lipkin also discussed how Newfront competes with some of its largest competitors.

“When we compete with firms much bigger than us, we're not competing with that entire firm, we're competing with a specialty vertical within that entire firm, where we've been able to go out and handpick the folks who we think are the absolute best-in-class team,” he commented.

“The other thing is, we're not going to compete with the large incumbents by playing their game. We're competing by playing a different game, right? We're pairing talent with technology and going to market that way and we're finding that that's working,” he added.

Watch the full interview with Newfront’s co-founder and CEO Spike Lipkin to hear more on: