The insurer was charged the fine by the state’s regulator for the use of certain software to illegally license staff.
California insurance company, Zenefits, is now facing a fine of $7 million from the state’s regulator. This fine is primarily the result of the insurer’s use of software that made it possible to complete the pre-licensing coursework in a period of time below the state requirement.
The California Department of Insurance penalized the health insurer with the multimillion dollar fine, last week.
As a result, Zenefits is now facing one of the largest penalties the regulator has ever issued to a California insurance company for licensing violations. It is also the largest settlement that Zenefits has ever had to face. This, despite the fact that it has been investigated multiple times in a number of different states for improper sales practices by its staff members.
Zenefits Is based in San Francisco and has settled a spectrum of different investigations in others states. Those states include Minnesota, Arizona and Tennessee. That said, those fines haven’t been nearly as large as the one just laid down in California. Typically, the fines it has faced in other states have been considerably smaller in the range of the tens of thousands of dollars.
That said, the latest fine for this California insurance company was for a practice at the foundation of its staff licensing.
Zenefits had been using a software program written by the company’s founder and former CEO Parker Conrad. Conrad resigned in February. His software allowed the company’s staff members to complete the pre-licensing coursework in less time than the California requirement.
It is more than likely that the insurance company will not need to pay the full amount of the fine. $3.5 million of that amount will be waived if it is able to pass the “market conduct” exam, said a spokesperson from the California Department of Insurance.
That said, beyond the amount of the fine the California insurance company will need to pay, it will also receive a bill for $160,000 toward the costs of the investigation that discovered the use of the software.