Incumbents in Utah Use State Government to Kill Competition

Across America, including red states like Utah, incumbent companies use state government to prevent competition. That’s what’s happening to Zenefits, a startup that makes it easier (and cheaper) for businesses to manage their employees’ benefits:

….Zenefits helps businesses by providing “a cloud-based dashboard to HR departments designed to help small businesses manage hiring, termination and all the benefits and payroll details necessary in-between those events.” Zenefits also connects companies with health insurance providers.

This cutting edge startup has experienced great success early on in large part because, as the aforementioned TechCrunch article points out, Zenefits “makes it just that much easier to manage the insurance piece once a business has authorized the company as its broker. And, as a result, more traditional insurance brokers are finding it difficult to compete with the company’s business model.”

Utah’s traditional insurance brokerage community is none too pleased about having to compete with Zenefits. On November 20, Utah Insurance Commissioner Todd Kiser sent a letter to Zenefits, informing the company that it is violating Utah inducement and rebating laws because it offers its software for free. Kiser said the company should be assessed $5,000 for each violation and twice the profit generated per violation. Because of this, Zenefits would currently be on the hook for at $97,000 penalty….

See, Republican Crony Capitalism On Display Out West @ Forbes.

The next time someone tells you that Republicans favor competition, or that only Democrats regulate markets, remind them of Zenefits.

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