This is an archived article that was published on sltrib.com in 2015, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Framed as a battle over Utah's reputation as free market and technology friendly, a Utah House committee on Monday overwhelmingly approved a bill aimed at ensuring that a technology-oriented California company is operating legally here.
Gov. Gary Herbert jumped on the bandwagon and urged the Legislature to "pass this bill without delay."
HB141 is aimed squarely at fixing a situation wherein the tech-oriented business model of a company called Zenefits has been tagged by Utah insurance regulators as operating illegally here.
That's because the Utah Insurance Department determined that San Francisco-based Zenefits gives away a software platform that allows small businesses to manage their human resources functions efficiently and also sells insurance policies to some of its clients using that platform.
Last year, Insurance Commissioner Todd Kiser sent the company a letter saying that in order to allow fair competition in the market, Utah law prohibits insurance companies from giving away services or goods to current or potential clients.
Zenefits complained loudly that Utah is the only state where it was prohibited from offering its business model. The legislation that was approved by the House Business and Labor Committee clarifies the law so companies can provide some free services or products as long as they are not contingent on the purchase of insurance.
Sponsor Rep. John Knotwell, R-Herriman, said his bill would not affect consumers, but would bring Utah in line with 40 or more other states where the 2-year-old Zenefits operates.
"This will harmonize with our desire of our state to be one that commits to the free market and that recognizes innovation and disruption in the marketplace," he said.
The bill was sent to the House floor with a favorable recommendation on a 12-2 vote. Only Rep. Susan Duckworth, D-Magna, and Rep. Curt Webb, R-Logan, voted no.
Webb said while he agrees with free market principals, there are good reasons for regulating insurance companies.
"If there is a legitimate reason for regulation, then we should be very careful about what we pass for fear it may be detrimental to the original reason for protection," he said.
Zenefits has tried to frame the debate over its business model as either allowing innovation in the marketplace or protecting existing businesses.
The governor's representative, Theresa Foxley of the Office of Economic Development, touted the legislation as providing a balance between the role of local insurance brokerages and the state's desire to allow innovative technology companies to operate here.