Prudential Life Insurance, a major foreign life insurer, disclosed that around 100 current and former employees in Japan were involved in misconduct, including promoting fictitious investment products and defrauding or borrowing money from customers.
The company said that between 1991 and 2025, approximately JPY3.1bn ($19.5m) was fraudulently obtained from about 500 individuals, with roughly JPY2.3bn still outstanding, reported Sanyonews Japan.
President Kan Mahara will step down from his role on 1 February 2026.
In June 2024, a former employee of the company was arrested over alleged fraudulent activities. Following an investigation initiated in August 2024 to inquire about any suspicious monetary transactions involving (former) employees, the company confirmed several cases of financial fraud and inappropriate conduct.
As of the conclusion of the investigation, the following findings were reported:
A. Direct Financial Fraud (Related to Insurance Business)
Three former employees engaged in fraudulent activities while employed.
B. Other Inappropriate Financial Conduct
While not directly related to insurance products, 106 current/former employees engaged in inappropriate financial behaviour (e.g., soliciting private investments or borrowing money from customers).
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Total amount received: approximately JPY3.08bn. This comprised JPY1.63bn received by the (former) employees during their tenure and JPY1.45bn after their resignation.
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Current deficit (Unreturned to Customers): Approximately JPY2.29bn.
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Inappropriate referrals: An additional 69 employees introduced 240 customers to unapproved investment products or vendors, resulting in approximately JPY1.31bn in payments by customers to those third parties.
Causes
Prudential Life has identified three primary root causes for these failures:
Sales Management and Compensation Model: Inadequate supervision by sales managers and a compensation system heavily weighted toward new sales performance. This created financial instability for some employees and prioritised monetary gain over ethics.
Management Governance: The board of directors failed to sufficiently debate risks inherent in the business model.
Organisational Culture: A culture that "deified" the existing business model and excessively prioritised high-performing sales employees, making it difficult to challenge problematic behaviours or structures
Corrective measures
Prudential Life, which apologised to its customers, said, “We are currently in the process of compensating the affected customers and taking other necessary actions after a thorough verification of the facts.”
The company is implementing several measures to eradicate financial misconduct. They include overhauling the sales and compensation system; active monitoring of sales activities; increasing direct communication between the corporate headquarters and customers; strengthening governance; increasing HQ involvement in hiring to vet ethical standards and improving compliance training.
The Financial Services Agency is carrying out a probe and considering disciplinary measures against Prudential Life Insurance.