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.
- here's the SJMC article