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The Washington State Insurance Commissioner has ordered insurance startup Zenefits to stop providing free use of its software in the state. The explanation being that it violates the state’s inducement laws, which prevent any one provider from acts that significantly undermine the competitiveness of the rest with extreme incentives.
“The inducement law in Washington is clear,” Commissioner Kreidler said in a statement accompanying the order. “Everyone has to play by the same rules.” As a result of the order, Zenefits has worked out a compromise with the State whereby it will offer its software on a paid basis, at a rate of $5 per employee per month. Zenefits was fined by the Commissioner perviously in October 2016, with a penalty totalling $100,000 as a result of its prior practice of skirting licensing requirements in the state, which ended prior to the exit of then-CEO Parker Conrad. Under current CEO David Sacks, Zenefits has been eager to rebuild its reputation and play by local licensing rules for insurance brokers in earnest.
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