Zenefits under scrutiny over allegations of unlicensed brokers selling health insurance

Zenefits, the fast-growing Silicon Valley startup offering cloud-based software as a service to companies for managing their human resources with a particular focus on helping them with their health insurance coverage, is under regulatory scrutiny for apparently flouting insurance laws by allowing unlicensed brokers to sell health insurance policies to businesses.

According to a BuzzFeed News investigation, Zenefits allowed numerous salespeople to act as insurance brokers in at least seven states without licenses to do so, dating back to summer 2014.

The BuzzFeed article says at least one regulator, the insurance commissioner in Washington state, is currently examining whether Zenefits operated there without licenses, according to a spokesperson for the agency, Stephanie Marquis. The Washington inquiry began in early 2015 and has not yet been resolved, she said.

Under Washington law, anyone who knowingly sells, solicits, or negotiates insurance without the proper state license is guilty of a Class B felony, which can carry a prison sentence of up to 10 years, as well as a civil penalty of up to $25,000 for each violation.

The article goes on to say Zenefits sales reps were told that they needed licenses to do their job, but managers in many cases showed a “blasé” attitude toward the requirement, pushing the unlicensed reps to meet sales quotas.

A written statement provided to BuzzFeed News by Zenefits spokesperson Kenneth Baer says, “It is — and has always been — Zenefits’ policy that every individual who sells insurance at Zenefits, as well as the company itself, must be licensed to sell insurance. Zenefits has more than 280 active resident insurance licenses and more than 2,500 active non-resident licenses, and these licensed brokers have sold thousands of insurance policies over the past two-and-a-half years.”

The article says that upon learning of the Washington state inquiry, “Zenefits scrambled to get its house in order,” and within days 22 Zenefits employees became licensed brokers in Washington.

Read the complete BuzzFeed News article here: Startup Zenefits under scrutiny four flouting insurance laws

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