Zenefits splashes into health insurance business, takes on broker role
Zenefits, a startup that first began selling cloud-based human resources software, is breaking into the health insurance industry by taking on the role of insurance broker, reports the San Jose Mercury News.
As a health insurance broker, Zenefits acts as the middleman between business and healthcare providers. Because the company monitors insurance sales between providers and employers, in addition to earning a broker fee, Zenefits can offer its benefits management software to businesses for free, according to the article.
The San Francisco-based company launched in April 2013. This August, Zenefits made about $1.5 million in new business--and then doubled that number in October. Revenue in 2014 is expected to grow 20 times greater than in 2013. The company is valued at $500 million, though it is not yet profitable.
Digital healthcare startups continue to be major players in the industry. Funding is expected to double to $6.5 billion by the end of 2017 and has grown at an average annual rate of 31 percent since 2008.
A paperless insurance and benefits program can help small companies such as Oakland's B&C Transit expand without adding human resources staff. Rashid Sigg, the public transit firm's executive vice president of operations, told the SJMN that Zenefits has done just as good a job as the firm's previous broker.
Thanks to Zenefits' growth--the company holds a broker license in every state, with some 2,000 customers nationwide--traditional insurance brokers view Zenefits as a major threat.
"They are certainly a threat to the industry. Every broker in the country is scared now of Zenefits," Paul Mifsud, founder and chief executive of Melita Group, an insurance and HR firm, told SJMN.
For more:
- here's the SJMC article
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