NY regulator fines Zenefits $1.2M for unlicensed insurance sales

Zenefits, a health benefits broker, agreed to pay a $1.2 million fine Tuesday following an investigation that found the company violated New York state insurance law.

The New York State Department of Financial Services' investigation uncovered Zenefits allowed unlicensed brokers to solicit, negotiate or sell insurance plans in 2014 and 2015. DFS investigators said Zenefits did not keep records used to verify New York insurance law compliance and did not implement necessary employee training programs or compliance controls.

Regulators also found Zenefits' former CEO Parker Conrad, who resigned in February 2016 amid legal scrutiny, wrote software in 2013 permitting brokers to bypass licensing requirements. Department officials said the software let users keep the timer of online education courses running even if an employee was not engaging with the course.

Zenefits self-reported the violations in 2015 following an internal investigation about the licensing issues. As of November 2016, Zenefits told DFS all employees selling insurance in New York had a valid license.

As part of the settlement, Zenefits agreed to take necessary actions to confirm its insurance brokers acquire appropriate licensing and undergo a minimum of 52 hours of insurance broker education. 

New York Financial Services Superintendent Maria Vullo said, "We believe that the penalty and remedies we have imposed, including retraining employees, will ensure the protection of New York consumers as Zenefits conducts its business."

Jessica Hoffman, a Zenefits spokesperson, said in a statement to Reuters the "tough but fair settlement shows new leadership's continued dedication to building solid relationships with regulators as we put the past behind us." 

The settlement is one of several the company agreed to involving licensing violations. The largest was in California, where Zenefits reached a $7 million settlement with the state's insurance regulator.

 

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