The Federal Trade Commission reached a $100 million settlement with Assurance IQ, the now-defunct Seattle-area insurance technology startup acquired by Prudential Financial in 2019 for $2.35 billion.
The FTC alleged that Assurance misled consumers shopping for health insurance and made deceptive statements about certain short-term medical and limited benefit indemnity plans, as well as supplemental products such as telemedicine, prescription discount, and vision and dental discount plans.
According to the FTC’s complaint, Assurance’s telemarketers followed company scripts that overstated coverage, promised steep “repricing” discounts without substantiation, and enrolled customers in supplemental products without clear disclosure or consent.
“The Defendant has deceived consumers out of hundreds of millions of dollars through the deceptive sales of these healthcare plans,” FTC said in its complaint.
Founded in 2016 by Michael Rowell and Michael Paulus, Assurance used technology to match consumers with insurance plans purchased online or through an agent. The startup flew under-the-radar in the Seattle region and never raised any outside capital as it quietly reached unicorn status as a $1 billion company.
The company’s acquisition to Prudential was one of the largest insurance tech exits ever.
Prudential shut down Assurance last year after missed financial targets and government inquiries. It laid off 112 workers in Seattle, according to a state filing.
Under a stipulated court order, Prudential — as Assurance’s parent company — will guarantee payment and compliance with the settlement terms.
The FTC’s action, filed this week in federal court in Seattle, is part of a broader $145 million settlement that also includes Los Angeles-based MediaAlpha, accused of misleading consumers through deceptive lead generation practices and robocalls.
