Key facts
- Prudential Life Insurance in Japan will abolish its performance-based, commission-heavy salary system.
- Sales staff will receive a base monthly salary of approximately 300,000 yen under the new system.
- The reforms follow a significant fraud scandal involving sales employees and customer funds.
- The company plans to reduce the number of executive officers and clarify their responsibilities.
- Prudential Life Japan experienced a nearly 50% drop in net income and ordinary profit in FY2025.
- An extraordinary loss of 4,748 million yen was provisioned for customer compensation due to fraud.
Prudential Life Insurance in Japan is set to abolish its heavily commission-based salary system following a significant fraud scandal involving sales employees. The insurer will introduce a new compensation structure that includes a base monthly salary of approximately 300,000 yen, aiming to address the misconduct that led to a voluntary suspension of new sales activities.
The scandal, which involved inappropriate acts with money, fictitious investment products, embezzlement, and personal borrowing from clients by over 100 current and former employees, has severely impacted the company's profitability and reputation. Prudential Life Japan recorded an extraordinary loss of 4.748 billion yen for customer compensation and saw its net income and ordinary profit fall by nearly half in the fiscal year ending March 31, 2026. New business volume also declined significantly, with a 22.9% drop to 3.507 trillion yen and a 13.0% decrease in new annualized premiums.
In addition to reforming its compensation system, Prudential plans to reduce its executive officer count, which currently exceeds 30, and clarify the responsibilities of each role. The company has established an independent "Customer Compensation Committee" composed of third-party experts to adjudicate claims and restore credibility with the Financial Services Agency. The total amount of fraudulent activities is estimated at 3.1 billion yen, affecting approximately 500 customers, with a significant portion yet to be repaid.