Zenefits

They can take a lesson from Zenefits, a clever human resources software company that helps small businesses manage their benefits.

Zenefits has unsettled nerves in the insurance industry but recently emerged triumphant from a huge battle in Utah.

Sometime soon Utah Governor Gary Herbert is expected to end a long stalemate between the company and the state by signing a bill allowing Zenefits to legally operate there.

Offering potential customers its software for free, Zenefits helps business owners deal with payroll, retirement funds, stock options and other HR chores.

If they end up buying coverage through the software, insurance companies pay Zenefits a 5% commission of the overall premium for the life of the policy.

Insurance brokers in several states have complained that they are losing business to Zenefits – and that its free software creates unfair competition.

In November, Utah’s Insurance Commissioner, Todd Kiser, who was actually appointed to the position by the aforementioned Governor Herbert, declared Zenefits illegal; according to Kiser, Zenefits is violating Utah’s rebates and inducement laws.

Like many other states, Utah has strict regulatory rules designed to make sure brokers don’t offer rebate benefits that might create unfair competition.

According to the Zenefits website, in late November Kiser ordered the company “To stop offering its free service to Utah businesses or face massive fines equal to $5,000 per violation, plus confiscation of all the company’s Utah revenue, plus penalties of 3 or 4 times that amount.” The state determined that Zenefits’ free services are “Indirect rebates” for buying insurance.

Instead of just accepting the ruling and moving out of Utah, Zenefits provided a road map for startups facing regulatory challenges in the future.

“If Utah is going to be a state that strongly supports free-market principles, you can’t protect incumbents from innovation and competition,” Parker Conrad, CEO and co-founder, told me in January.

“Let Utah’s small businesses choose who they want to use.”

(Credits Mike Montgomery)

The post Zenefits Is Fighting Back Against Regulation appeared first on TalksFriendite .