Zenefits settles insurance licensing compliance issuesReprints
Notorious tech-focused benefits broker Zenefits has settled a licensing dispute with Tennessee insurance regulators, the first step in resolving several state compliance issues that plagued the company under its former leadership.
The San Francisco-based broker, whose founding CEO, Parker Conrad, was ousted in February amid compliance concerns, will pay a $62,500 fine to the Tennessee Department of Commerce and Insurance for allowing its brokers to sell insurance in the state without a license, according to the consent order released Monday and dated July 18. As a result, Zenefits will continue operating in the state.
According to the consent order, Zenefits in March voluntarily told Tennessee regulators that about 65 insurance transactions occurred in the state in 2014 and 2015 involving unlicensed Zenefits brokers.
Zenefits blamed its compliance failures on its rapid growth over the past few years, the consent order states.
“Under the company's past leadership, compliance with insurance laws and regulations was almost an afterthought,” Tennessee Insurance Commissioner Julie Mix McPeak said in a statement announcing the agreement. “Fortunately, new company leadership has demonstrated a dedication to righting the ship.”
Since David Sacks took the helm as CEO of Zenefits in February, the company has worked to bring its practices into compliance. The insurer overhauled its leadership and established a compliance team. Zenefits also pledged that its brokers will complete 52 hours of continuing education courses, including 12 hours of ethics training, according to a Monday blog post from Mr. Sacks.
Mr. Sacks also said the company self-reported compliance violations with all states' insurance departments as of March 1.
“Zenefits has reached a watershed moment: not only does this agreement pave the way for us to continue operating in the great state of Tennessee, it also recognizes that Zenefits is a new company that has moved past its historical issues. We look forward to reaching resolution with other states soon,” Mr. Sacks said in the blog post.
California and Washington are also investigating Zenefits licensing issues.