Since launching in February as a free application to ensure brokers are licensed in each state they work in, Zenefits’ Licensing+ is now used by nearly 300 producers at the company, who have among them 10,000 licenses.
Zenefits does not track external downloads of the software, which is available to any producer through Salesforce’s app store. It was originally built by Zenefits in response to charges and subsequent settlements with regulators across the country that the company created software to skirt training requirements and sold health insurance without the necessary licenses.
Last week, the company agreed to pay as much as $7 million over licensing violations to California’s insurance regulator. Zenefits has resolved issues in 17 states, with additional fines of about $1 million total. Further, the company has slashed head count and agreed to reduce its valuation to $2 billion in exchange for shareholders agreeing not to sue the company.
Licensing+ was built internally to prevent the sale, solicitation, or negotiation of insurance without a license, explains Niji Sabharwal, Zenefits’ director of producer licensing and broker compliance. The program checks at different milestones to ensure a producer has the right licenses to perform in the state the policy is being written in. It is fully integrated with the National Insurance Producer Registry.
If the program determines a producer is not properly licensed in the state a sale is taking place in, it will lock them out, even mid-deal, Sabharwal says. If the producer’s license is expired in that state, it will cancel all deals.
While Licensing+ was mostly developed for Zenefits staff and other producers and agents, Sabharwal says that most of the interest has been from carriers. “Some [carriers] have several hundred direct salespeople and have little ability to control sales across state lines or have a call center,” he says. “We also have strategic partnerships with these carriers. A few reached out proactively before we announced we are launching this.”
HealthNet is one carrier using the software. It “save(s) tremendous time by eliminating the manual, administrative process of managing agents' state licenses and also help ensure data accuracy,” says Bill Shepard, HealthNet’s VP of sales.
Why make it free?
Sabharwal explains that licensing is “incredibly complex” as each state has a different nomenclature and the licenses required to sell each unique line of coverage may vary in name state-by-state.
The software is free, besides a fee that must be paid to the NIPR; Zenefits receives none of this money. Although it took time and effort to develop, Sabharwal says they determined to opensource the tool because driving compliance in the industry is good for everyone. Zenefits has no access to any producer names, NIPR transactions or any data from the CRM. Additionally, no usage data is collected by Zenefits.
“If someone gets tagged with a licensing issue, it is bad for everyone,” he says. “We wanted to promote compliance in the industry and make it attainable. We put all this hard work into this software and thought why not make it open source so it works for everyone and become a poster-child for licensing compliance in the process.”
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