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Comment by yummyfajitas | Hacker News Reader

I wonder why "The Macro" doesn't also highlight the perils of clueless regulators imposing moronic laws on HR departments.

The specific law that Zenefits violated was a law insisting that before selling insurance, your employees need to sit at a computer and click "next" for 52 hours. Once they've clicked "next" sufficiently many times, only then are they permitted to take the exam to determine whether they have enough knowledge to sell insurance.

Shouldn't this scandal also highlight the perils of a regulatory state?

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I just made a similar comment before seeing yours. https://news.ycombinator.com/item?id=11125679

Clicking "next" for 52 hours is clearly absurd, though I would take it farther and argue that no exam should be required to be an insurance broker at all.

> I would take it farther and argue that no exam should be required to be an insurance broker at all.

I can see the benefits of requiring competency before being allowed to sell insurance to the public. Insurance is important. It's what you rely on to defray potentially millions of dollars in damages (up to and including the death of yourself or your spouse) when something goes horribly wrong. And it would be a huge travesty if you didn't actually have the coverage you thought you did because the unlicensed, untrained, and inexperienced agent that sold you your policy didn't correctly explain it, or didn't understand your needs.

Maybe we should make everyone who buys insurance take a test to show basic competency beforehand.

You're joking, right?

I think you're wrong. I think that all evidence shows us that it's much more effective to educate the consumers of a good/service than to educate the producers. An educated and informed public is the most powerful force there is in guaranteeing a quality product.

In all seriousness, I obviously don't think a test should be required to buy insurance, but I do think that government putting a little more effort into educating the populace on financial topics (including insurance) would do much more good than having brokers jump through silly hoops like the one under discussion here.

The problem arises when you ask yourself the question: "Where does this customer education stops?". Of course it is better to have a public competent in buying insurance, food, housing, financial products, health treatments, etc... But you are requiring to put an amount of knowledge into every head that simply cannot fit.

It's much better to train the specialized provider, because then each head has only to fit the knowledge required for their own profession. This is feasible and with much less effort. Slightly worse result, but there's no free lunch.

You cannot realistically expect every person to know the ins and outs of every product. I cannot be an expert on insurance, mortgages, food safety, automobiles, mechanics, etc., and it's ludicrous to say that everyone should be. You know how dumb the median person is? Half the people are dumber than that.

So given that it will never happen that everyone is an expert at everything, we need alternate systems to protect people. Like licensing and regulation. All you've got is an impossible pipe dream.

Especially when misinformation is so easy to spread.

Insurance is important, but that doesn't mean a license should be legally required, for a few reasons:

1. Ethically, I think that if you choose to do business with an untrained, inexperienced broker, then the consequences are on you. In fact, there may be legitimate reasons to do so, which brings us to point 2.

2. If the members of a profession control entry into that profession, which is always the case with occupational licensure, then those members have a strong economic incentive to construct barriers to entry. More and more irrelevant requirements will be added over time. Certification protects against this tendency while still providing all of the supposed informational benefits of licensure. If certification requirements become too crazy and irrelevant, the price differential between certified and uncertified professionals will increase, and consumers will start to use uncertified professionals instead, forcing the certification requirements back down to sanity.

1. How would you know?

2. You know this licensing system did not come out of thin air? Got an example of a working, critical certification system?

1. I was just stating my opinion. If somebody wants to go to an incompetent insurance broker, or do dangerous drugs, or jump off a cliff, I think that should be their right since those decisions don't significantly affect anyone else. Again, just my opinion on an ethical matter, a reasonable person could disagree.

2. My understanding is that there are few government-mandated certification systems because they tend to gradually evolve towards licensure, due to political pressure from producer groups. There are many private certification systems that work quite well. The Good Housekeeping Seal of Approval is a private certification system for household products. Stores such as Target certify the value of the products that they sell in order to guard their own reputation. I'm hesitant to mention this because I don't know much about it, but I believe accountants are also certified rather than licensed.

Insurance significantly effects other people - thats why the state requires you to have it in order to register a motor vehicle.

"I was just stating my opinion. If somebody wants to go to an incompetent insurance broker, or do dangerous drugs, or jump off a cliff, I think that should be their right since those decisions don't significantly affect anyone else."

This has been proven false time and time again. I know libertarian types like to pretend it, but you are not an island. You do not exist in a vacuum.

How would you know you're dealing with an incompetent broker?

As long as the insurance agent selling you a policy has adequate insurance to cover any liability that arises due to their lack of training and experience, it's all turtl^H^H^H^H^Hgood.

Good thing that's NOT what is required.

But isn't it reasonable to require studying materials for a certain time? I mean, the goal of s course isn't to pass the exam, it is to gain knowledge on a complex matter. Spending 50 hours studying something will definitely lead to better retention and understanding than 20 hours, even if 20 hours would be enough to pass the exam.

It's quite possible for a person to study for 50 or 100 or 1000 hours and not possess that knowledge, or to study for 3 hours and know it well. People learn at different rates. That's why we have exams - to measure if the person actually has the knowledge.

It sounds like you are saying that California regulators made a disastrously bad test that doesn't measure knowledge well, so therefore we should require people to click "next" for 52 hours in the hopes that knowledge enters their skulls even if we can't measure it?

"Spending 50 hours studying something will definitely lead to better retention and understanding than 20 hours, even if 20 hours would be enough to pass the exam."

Actually, I'd be inclined to "citation needed" that. Brains are curious things.

Out of my personal bumhole, I'd suggest that if you want to ensure retention, you're far better off retesting frequently. A big-but-not-quite-as-big certification test up front, and monthly recertification tests that are much smaller, but still cover the entire space fairly well, strikes me as much more likely to ensure retention. One big test is too amenable to cramming, which I believe is scientifically demonstrated to work great for passing tests but causes the knowledge to disappear a few days later. Then, scrap the hour requirements entirely.

Presumably, if the exam is well-designed, you can't pass it without understanding the material, which you could learn over however many hours you like. Requiring both an exam and a mandatory number of hours seems redundant.

That's not the law they broke, that's just a regulation that the insurance board is conducting an internal review of.

The law they broke was selling insurance without the use of unlicensed brokers.

Once they've clicked "next" sufficiently many times...

Sounds like a job for Homer's typing bird!

No, because this scandal is entirely the fault of Zenefits and people who worked there. No one else. Period.

Modest amounts of wasted time? Oh no.

I suppose one way to estimate how onerous this requirement is (I agree that to the extent it is arbitrary that it is dumb) would be to compare how much compensation the insurance license makes available to how much compensation spending the equivalent time learning a skill like welding makes available.

(I think most people wouldn't be very good at welding after 50 hours of training and practice)

Welding isn't some mystical craft. Most people would be competent for many welding tasks after that much actual time spent welding. If the "training" consisted mostly of clicking "Next", however...

As an aside on the subject of welding, with less then ten hours' experience I could weld together two plates of steel (about 3mm thick) such that they withstood having the crap beaten out of them for a hour with a hammer with no visible issues at the weld. Sure, it's a very simple weld in easy circumstances and matching materials, but as you say, it wasn't anything mystical.

All you propose measuring is the individual benefit to sitting through training. That's a terrible way to measure the social cost of a bad regulation.

The social cost is 52 hours of productive output from moderately skilled employees. (Or moderately less - if learning the material takes 20 hours, then the waste is 32 hours assuming people can simultaneously learn the material and click.)

The right thing to do is simply make people take the test, and if the test isn't accurately measuring people's insurance selling ability, fix the test.

Yeah, I agree it isn't a particularly useful measure. But it was mostly aimed at evaluating whether the regulation in question is perilous or not.

Of course a problem with bad regulation is that can have an enormous aggregate effect, but in this case I think we can reasonably assume that Zenefits didn't need to encourage employees to avoid this regulation in order to grow itself rapidly.

And what's the social cost of unlicensed, untrained people selling insurance? What's the societal cost of people who have not studied selling insurance that they might not understand?

I don't see a very high social cost from licensed insurance salespeople who passed the exam selling insurance. Do you? If so, what is it?

Again, note that we are discussing spending 52 hours clicking through a powerpoint before you are allowed to take the test to get the license.

"I don't see a very high social cost from licensed insurance salespeople who passed the exam selling insurance. Do you? If so, what is it?"

How do you know that they passed the exam? They told you?

"Again, note that we are discussing spending 52 hours clicking through a powerpoint before you are allowed to take the test to get the license."

No, we are not.

All anyone has accused Zenefits of doing is using a macro to prevent people from being auto-logged out of training. E.g.: http://www.buzzfeed.com/williamalden/zenefits-program-let-in...

The Macro functioned to keep a person logged into the course and prevented the person from being logged out for inactivity. The Macro did not advance through the required material or quizzes in the education course — the Macro only kept the person logged in. The Macro only pertained to the prelicensing education course and did not affect the broker exam taken later.

If you have even accusations of some other activity (let alone evidence of it), go ahead and post it.

Have you not read any of the articles? The cheating on the time is just one issue. They had unlicensed brokers selling insurance in two states, which is an actual crime.

> I think most people wouldn't be very good at welding after 50 hours of training and practice

This is true.

I don't see the insurance training as how-to-do-one's-job, however. More akin to how not to do it. Financial health and safety training.

A welder receiving 50+ hours in health and safety at the start of their career, among other trainings, seems reasonable. As does 1 hour health and safety training and sharing each week with the team. An equivalent requirement in finance does not seem unreasonable, given the damage that can be done by being unaware of (once you know them) basic concepts in mis-selling, fraud, money laundering and a long list of identifying black-market financing organisations.

> Modest amounts of wasted time? Oh no.

Um, 52 hours * 50 states (insurance regulations are per state, normally) = 2500 hours. More than the number of work hours in a year.

That's a bit more than "modest".

The whole point of Zenefits was to consolidate the point of contact and thus reduce the expense through consolidation. That doesn't really work if you need a separate person per state.

Normally, I find myself staunchly on the opposite side of the argument from Zenefits; I think that Uber and AirBnB are being patently abusive in their actions. I find the fact that Zenefits was threatening the insurance industry, who are noted for being a huge bunch of assholes, far more palatable.

It goes to show that my views aren't as immutable or as charitable as I thought.

> (I think most people wouldn't be very good at welding after 50 hours of training and practice)

You'd be surprised. That's the right range for basic functionality for a lot of things. Even a Language 101 class is only about 100 hours, and you can normally ask for the bathroom and find basic directions afterward.

Do all states have the 52 hour requirement? Do they require someone that has obtained a resident license in another state to do as much work as someone who has no license?

You'd be surprised.

Would I? I was talking about employability, not avoiding wet pants during a 2 week visit. I think if it were much worth employing someone to weld after 50 hours of training, we wouldn't have industry screaming about welders (maybe it's regulation requiring industry to only hire well trained welders?).

> we wouldn't have industry screaming about welders (maybe it's regulation requiring industry to only hire well trained welders?).

Separate issue.

Yeah, the industry is screaming for welders, machinists, etc. Yet, the salaries aren't going up, hmmmmmmmm.

Perhaps they don't actually have a shortage of welders, but, instead, have a shortage of cheap welders.

I have yet to see any companies subsidizing the education of these folks. That's the true sign that they're really serious about it.

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