On Oct. 9, the Financial Services Agency ordered Prudential Life Insurance to partly suspend business. The period runs from the 13th through the end of January next year, and the solicitation of new contracts and more is halted. The parent, Prudential Holdings of Japan, received a business improvement order, and Jiji Press reported that the deadline for submitting a plan is the end of November. It is said to be the first business suspension for a life insurer since Japan Post Insurance in 2019. In the report of an outside investigation committee released on the 8th, reported losses from the fraud of customers' money came to about ¥6.2 billion. The same day the company announced that it had dismissed 64 sales employees involved and suspended 68. The president and other executives will return 30% of their pay for three months. The committee pointed out that a way of doing business that relied on sales results and personal connections invited the runaway behavior. The FSA's own announcement has not yet been confirmed.
When employees personally take customers' money, the question is whether the company's system allowed it. Jiji Press reported that a business improvement order was also issued to the parent, which means the FSA treated this not as one company's employee problem but as a problem of the group's management. Insurance is a product people stay with for a long time, and trust in the person selling it is the foundation.
People who already hold policies will not see their coverage vanish automatically, but check how things are handled in the official notice from your insurer. If an insurance sales representative brings up money or investments under a name separate from premium payments, decline and check with the company's service desk. People considering new insurance cannot sign new contracts with Prudential Life during the suspension.
This is a heavy penalty, second only to license revocation. To prevent a recurrence, it had to come down this hard.
Halting new sales also affects the many employees who work honestly and the policyholders who rely on coverage. Unless refunds to victims and reform of the pay system come with it, the penalty ends as a change of signboard.
Today's number is “¥6.2 billion.” It doubled from the initial figure of about ¥3.1 billion. There are three things to watch: the start of the suspension on the 13th, how far the improvement plan due at the end of November goes into the sales pay system, and how refunds to the people affected progress. Reports may keep coming in, so until the total is fixed, take this number as an interim figure.
Asahi Shimbun · Mainichi Shimbun · NHK · The Japan Times · Toyo Keizai Online · Jiji Press (Oct. 8–9. Period and improvement order from Jiji Press and Asahi Shimbun, losses and headcounts from Mainichi Shimbun)
FSA Orders Prudential Life to Suspend Part of Its Business for Over 3 Months; Reported Losses Reach About ¥6.2 Billion
Insurance salespeople took money from customers. The Financial Services Agency halted new sales. What is in question is the system on the selling side itself.
On the 9th, the Financial Services Agency (FSA) ordered Prudential Life Insurance to partly suspend business. The action responds to employees defrauding customers of money. It runs more than three months, from the 13th through the end of January next year, and halts the solicitation of new contracts and more (Asahi Shimbun, Mainichi Shimbun, NHK, Jiji Press). The parent, Prudential Holdings of Japan, also received a business improvement order demanding stronger governance. According to Jiji Press, the deadline for submitting an improvement plan is the end of November. It is said to be the first business suspension order against a life insurer since Japan Post Insurance in 2019. The scale of the damage has swelled sharply over the past few months. The company's initial figure was about ¥3.1 billion, but a report by an outside investigation committee released on the 8th put the reported losses at about ¥6.2 billion (Mainichi Shimbun). On the 8th the company announced that it had dismissed 64 sales employees involved in the fraud and suspended 68, that its president and other executives will return 30% of their pay for three months, and the president apologized at a press conference on the 8th (Mainichi Shimbun, NHK).
The Mainichi Shimbun reported that the FSA pointed to a strong fixation on money, among other things. The investigation committee analyzed that a way of doing business that relied too heavily on sales results and personal connections invited the runaway behavior (Asahi Shimbun), and reported that calls for a review had been raised since 2004 yet were overlooked again and again (Mainichi Shimbun). In testimony from former employees relayed by the Mainichi Shimbun, some people worked while carrying debt, and only a few earned high pay. The company has refrained from new sales since February, and the action will delay a restart further. The suspension covers the solicitation of new contracts and more; for how policies already signed are handled, check each company's notices. Note, however, that the ¥6.2 billion is a figure based on reports, and the actual total has not been determined. There are three things to watch from here: the start of the suspension on the 13th (the first business day after the three-day weekend), the content of the improvement plan due at the end of November, and how far refunds to the people affected progress. Did the pay system on the selling side give people a motive to take customers' money? The question is whether that is fixed, not whether the matter simply ends with the penalty. Note that the details of the action are based on each outlet's reporting, and the FSA's own announcement could not be checked.