Another state launches investigation into Zenefits

New England is the latest region to launch a formal inquiry into the benefits software firm after it emerged that many of its healthcare policies were sold by unlicensed employees

Insurance News

By Lyle Adriano

Zenefits Inc. once again has the attention of insurance regulators; this time, the human resources software company and benefits broker is under investigation by the Massachusetts Division of Insurance, said an article on the Boston Globe website Mar. 9.

The company, based in San Francisco, provides software that automates payroll and benefits administration. Zenefits also offers a free technology package for small companies to better manage their employees’ payroll and benefits. Whenever the company’s clients sign up for health insurance and benefits plans using the system, Zenefits earns commissions.

Concerns regarding the company’s license to offer group health insurance were raised by regulators in California and Washington. Supposedly, Zenefits’ clients were purchasing complex insurance products from the company’s brokers, who appeared untrained.

Massachusetts Division of Insurance spokesman Chris Goetcheus confirmed that the agency is investigating Zenefits, but declined to disclose what prompted the probe.

Zenefits founder Parker Conrad resigned last month amidst concerns regarding compliance with state licensing rules. New CEO David Sacks has hired a third-party company to investigate allegations that company employees have violated licensing requirements.

The company has informed California and other states that some of its brokers may not have been properly licensed to sell insurance.

“We have been fully cooperating with regulators,” remarked spokesman Kenneth Baer. “We accept full responsibility for what may have transpired in the past, and we also are looking forward to a new Zenefits that takes its regulatory obligations seriously.”

The Boston Globe additionally wrote that Zenefits’ separate broker services got the company into trouble.
 

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