Insurance Business Start-up broker slapped with $1.2 million fine for unlicensed sales

Start-up broker slapped with $1.2 million fine for unlicensed salesZenefits CEO Parker Conrad (Image by: JD Lasica)

Health insurance broker Zenefits has been slapped with a $1.2 million fine by New York’s Department of Financial Services for letting unlicensed employees sell policies.

The fine is the latest in a string of regulatory blows for the startup, according to a Fortune report. In 2014 and 2015, the DFS tagged Zenefits for “repeated” violations of state insurance law such as failing to maintain adequate compliance controls. The DFS also slammed Zenefits founder and former CEO Parker Conrad, who in 2013 wrote software that let company employees avoid broker education requirements, Fortune reported.

According to the DFS, Zenefits actually reported on its own that it had learned its employees were selling insurance without licenses.

“DFS takes very seriously any unlicensed activity in the New York insurance market,” DFS Superintendent Maria Vullo said. “The penalty and remedies we have imposed, including retraining employees, will ensure the protection of New York Consumers.

A spokesperson for Zenefits told Fortune that the company felt the penalty was “tough but fair.”

The company, founded in 2013, has been valued as high as $4.5 billion, but has faced numerous woes brought on largely by its legal issues. In February, the company said it would lay off 430 employees – more than 40% of its staff, according to Fortune.