TOKYO (TR) – Earlier this month, Prudential Life Insurance Co., Ltd. revealed that present and previous staff inappropriately obtained over 3.1 billion yen from practically 500 prospects.
At the press convention on January 23, president Kan Mabara apologized: “We sincerely and deeply apologize for the great anxiety and inconvenience caused to our customers and others who were victimized by the discovery of serious inappropriate conduct over many years.”
Mabara additionally introduced {that a} third-party committee could be established to supply compensation to prospects. As nicely, he has resigned from his put up, efficient on February 1.
Obviously, the story doesn’t finish there. Since the revelations grew to become public, numerous tabloids have issued experiences as to what really went on at Prudential Life. In abstract, it was a large-scale fraud carried out by aggressive salespeople that manipulated a system missing oversight.
Repeated arrests
Founded in 1987, Prudential Life makes use of a uniquely aggressive gross sales model for its gross sales representatives, who’re generally known as “Life Planners.” As a consequence, the corporate has generated roughly 3.8 trillion yen in premium and different earnings, rivaling Sumitomo Life Insurance to make it one among Japan’s main life insurance coverage firms.
Shortly after its begin, that aggressive gross sales method received uncontrolled. Those previous and present staff concerned within the fraud made fictitious funding affords to policyholders and potential prospects, promising principal ensures and excessive returns, after which had them switch cash into their accounts. Some victims suffered losses within the tens of thousands and thousands of yen, and lawsuits have been filed in opposition to the corporate.
Prudential Life started its inside investigation in August 2024, triggered by the repeated arrests of former staff on suspicion of fraud, experiences weekly tabloid Shukan Bunshun (Jan. 29).
“In June 2024, Ishikawa Prefectural Police arrested a former employee in his 60s for defrauding Prudential Life customers under the guise of investment management,” a social affairs reporter explains.
There have been 34 victims with losses totaling 750 million yen. In September of the identical 12 months, one other former worker in his 30s was arrested on suspicion of fraud for making fictitious funding affords.
The Financial Services Agency grew to become involved by the string of those fraud instances. In April 2025, it ordered Prudential Life and its Japanese holding firm to difficulty a report beneath the Insurance Business Act.
Furthermore, it was found that Prudential Life had obtained inappropriate funds by means of strategies unrelated to its insurance coverage operations.
“Since 1991, a total of 106 current and former employees approached a total of approximately 500 customers with investment and profit-making opportunities in cryptocurrencies and other assets, and embezzled the money they received. Numerous cases were also found in which the employees borrowed money and never paid it back,” the reporter says.
These staff obtained a complete of roughly 3.08 billion yen. Of that, roughly 2.29 billion yen has not been returned to prospects.
In one case, a girl sued a feminine worker who had sexual relations together with her husband in securing a deal, a observe referred to ask makura eigyo (pillow gross sales).
Another feminine sufferer tells her story in a later report on the web website of Bunshun (Jan. 24). After assembly a Life Planner at an izakaya restaurant, she signed up for insurance coverage.
“[The LP] was always living a life of luxury, even paying for other customers’ bills at restaurants,” she says. “I also remember him bragging about ‘paying his mistress’s rent’ despite being married.”
However, six months later, he requested her for cash for divorce mediation. She wound up lending him 1.23 million yen, which he promised to pay again.
“I trusted him because of the company’s title, Prudential Life, and his lavish lifestyle,” she says.
The cash was by no means returned.
Severance bundle of practically 100 million yen
In response to the misappropriations, Mabara tendered his resignation. He introduced that he would get replaced by Hiromitsu Tokumaru, President and CEO of group firm Prudential Gibraltar Financial Life Insurance. However, Mabara will stay with the corporate in an “advisor” function.
A former worker of the corporate is outraged on the reshuffle.
“Despite the fact that such a major issue has come to light, president Mabara will be paid a severance package of nearly 100 million yen,” the previous worker says. “He is also expected to receive stock options worth around 150 million yen. And yet, it’s inconceivable that he intends to stay on at the company as an ‘advisor.’”
When Bunshun requested Prudential Life for remark, the corporate gave the next response: “[Regarding the president’s appointment as an advisor], given that the transition has not been fully completed, we will support the management team in implementing measures to prevent a recurrence until the end of July. Mabara plans to resign from his advisory position at the end of July.”
In addition, the aforementioned press convention did precisely encourage confidence that some form of rehabilitation will happen at Prudential Life.
An economics reporter says: “The day of the press conference saw the dissolution of the House of Representatives and a press conference by the Bank of Japan Governor. Prudential Life likely arranged the schedule to minimize the coverage of their press conference. Furthermore, the ability to ask questions at the conference was limited to Bank of Japan Press Club member companies and business magazines with which they regularly have contact. At the last minute, freelance and magazine reporters were finally allowed to ask questions, but their handling of the situation seemed extremely dishonest.”
Plagued by scandals
Japan’s life insurance coverage business has been tormented by scandals lately.
Six years in the past, a case of fraud of roughly 1.9 billion yen by a former particular investigator at Dai-ichi Life Insurance was uncovered. The girl had proposed fictitious monetary transactions to a complete of 24 prospects.
In 2011, a former gross sales consultant at Nippon Life Insurance was found to have proposed a fictitious insurance coverage contract to a girl in her 90s and defrauded her of roughly 15.32 million yen.
The subsequent 12 months, it was found {that a} former gross sales consultant at Meiji Yasuda Life Insurance had defrauded 10 prospects of roughly 130 million yen.
In March 2013, Taiki Life Insurance introduced {that a} former gross sales consultant had defrauded prospects of roughly 81.3 million yen. Nine months later, Meiji Yasuda Life Insurance introduced {that a} former gross sales consultant had defrauded roughly 200 million yen.
“Excessive respect for salespeople”
As alluded to beforehand, Prudential Life’s gross sales mannequin is exclusive within the life insurance coverage business, with Life Planners managing gross sales accounts, experiences the web website for Spa! (Jan. 25).
After a sure time frame, Life Planners are positioned on a full fee system, or performance-based compensation. If they safe many contracts and obtain excessive efficiency, they’ll earn annual compensation within the lots of of thousands and thousands. However, if their efficiency is poor, their wage will probably be decrease.
The outcomes of its inside investigation as revealed on January 16 talked about this compensation system.
“A compensation system that was excessively linked to performance attracted personnel with a financially focused mindset, and the instability of salespeople’s income increased the risk of inappropriate behavior,” the report discovered.
It went on, “An organizational culture of excessive respect for salespeople, an absolute emphasis on the business model, and high praise for high performers had been cultivated.”
It added, “In sales systems, salespeople are primarily evaluated based on the number of new contracts they secure and maintain. Therefore, salespeople with good performance, higher qualifications, and numerous awards are likely to be perceived as having earned the respect and trust of customers, and as a result, they tend to have a greater say.”
A former Prudential Life worker says, “When I was there, there were no restrictions other than being required to come to the office once or twice a week, and each sales representative was free to act as they pleased. The basic pattern was to make sales through referrals from acquaintances and policyholders, and unlike major domestic insurance companies, many of our policyholders were relatively high-income earners, such as business managers, private practice physicians, lawyers, employees of foreign companies, and people in other specific professions. For example, business managers are often connected to many fellow business managers, and through referrals they can gain strong connections and expertise in that world, making it easier to secure contracts.”
The common annual wage for an worker is often 10 to twenty million yen. “But you have to keep signing new contracts at a rate of at least one per week, which is quite tough. Conversely, those who can’t produce that kind of results will quit, so employees who are capable enough to survive will earn that much,” the identical former worker says.
There is not any actual quota system.
“If performance doesn’t improve,” the previous worker says, “salaries simply decrease, but the company rarely presses employees. If the salary becomes so low that it’s unlivable, employees can simply quit and find another job, so I personally feel that in some ways it’s a fair environment. While I mentioned freedom in work style earlier, as a financial institution, financial transactions with customers and third parties involved in insurance solicitation are strict, and borrowing or receiving money from customers is prohibited by company rules. If discovered, employees have no right to complain even if they are fired. The training system is comprehensive, making it a good environment for those who want to improve their financial knowledge. Also, when I was there, there was a system in place that invited top performers and their families to an awards event at a luxury hotel in Hawaii once a year, and there was also an incentive of a trip to Hawaii on company funds.”
“Undermine the company’s competitiveness”
In the aforementioned report, Prudential Life listed measures to forestall recurrence comparable to “fundamental improvements to incentive structures such as sales compensation systems” and “strengthening systems to properly understand and manage when, where, to whom, and what sales activities sales employees are conducting.”
The aforementioned worker is skeptical.
“Prudential Life’s competitive edge lies in its high compensation, which is based entirely on commission,” the previous worker says. “Any major changes to this compensation system would significantly lower employee motivation, and its best salespeople would likely move to other companies or industries where they could receive higher compensation.”
Furthermore, the corporate’s salespeople shut offers by constructing relationships with prospects.
“This is done in various ways. Even on weekends and late at night, they go golfing or out drinking with them,” the aforementioned worker says. “Therefore, controlling or restricting these behind-the-scenes sales activities, such as restricting excessive socializing in private, would significantly undermine the company’s competitiveness.”