Online insurance site under investigation

A major web-based start-up is being investigated for allegedly allowing unlicensed brokers to sell insurance

Insurance News

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Online HR platform Zenefits is under fire for supposedly permitting salespeople in at least seven states to misrepresent themselves as insurance agents, according to the Washington state’s office of the insurance commissioner.
 
Earlier this year, authorities have started probing the company on the possible violations, which go back to at least summer 2014.  Zenefits allegedly allowed unlicensed brokers to sell health insurance products.
 
If proven true, the violation can be considered a Class B felony under state laws, carrying a $20,000 fine and a prison sentence of up to 10 years.
 
The office of the insurance commissioner said that Zenefits might have realized the violations and the resulting investigation, and was thus compelled to get licensed sales agents. State records confirmed that 22 agents became licensed insurance brokers just days after the start-up learned about the state inquiry.
 
The case is just the latest of the cloud platform’s various brushes with the law. Previously, the Utah Insurance Department investigated Zenefits over allegations of illegal free distribution of insurance software, contending that such actions are unfair to traditional brokers. The complaint was eventually dismissed by both the Utah House and Senate.
 
Zenefits missed its revenue goals for this year, with not even half of the $100 million-target earned as of August. A recent series of lay-offs (including at least eight executives) and pay-cutting has also cast doubts on the start-up’s capability to get back on track.
 

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