Prudential Life Insurance to restructure following massive fraud scandal

Prudential Life Insurance has released a report detailing widespread financial misconduct involving employees and former employees that spanned over 30 years. The investigation revealed that misconduct was not merely a series of individual actions but a result of structural and management issues, including a compensation system heavily reliant on performance and an over-dependence on personal networks.

Specific fraudulent activities included soliciting funds for fictitious high-interest deposits and misrepresenting the company’s involvement in a laundry business. The total reported damages to customers amount to approximately 6.16 billion yen. In response, the company has disciplined 157 individuals, including dismissals.

To prevent recurrence, Prudential Life Insurance plans to fundamentally restructure its sales operations, reducing its number of branches from 139 to between 40 and 50. The company will also overhaul its compensation model by introducing a minimum guaranteed salary and increasing the weight of after-sales service in remuneration from less than 5% to approximately 20%. Additionally, the company will implement AI-driven recording of client meetings to enhance transparency. President Hiromitsu Tokumaru and two other executives have agreed to return 30% of their monthly compensation for three months to take responsibility.