Japan's Financial Services Agency (FSA) has ordered two Japanese life insurers owned by Prudential Financial to suspend new business.
This is the latest step in a fraud scandal involving the company's sales staff that has been building since the start of the year.
The FSA issued business suspension and business improvement orders to The Prudential Life Insurance Company (Prudential of Japan). Prudential of Japan cannot solicit new business until January 31, 2027. Gibraltar Life Insurance Company received a partial business suspension and an improvement order, which also runs to January 31. The partial suspension covers Gibraltar’s Life Consultant channel, its employed sales force, but not its independent agency channel. The holding company, Prudential Holdings of Japan, received a business improvement order.
All three companies must submit business improvement plans to the FSA by the end of November and report on their progress regularly.
Prudential of Japan disclosed in January that 107 current and former employees had defrauded about 500 customers of roughly ¥3.1 billion between 1991 and 2025, according to Insurance Business’s earlier coverage. Employees had improperly taken money from customers, including by soliciting investments or borrowing from them. A further 69 current and former employees introduced unapproved investment products and firms to around 240 customers.
The company voluntarily suspended new sales from February 9, initially for 90 days. It set up a program to reimburse affected customers and pledged to restructure incentive pay and strengthen oversight of its sales practices. The voluntary suspension was later extended.
Prudential said both an investigation by a special committee and the FSA’s inspection examined the conditions behind the misconduct. In its own review, published in January, the company said weak oversight by sales managers had allowed close relationships between salespeople and customers to develop, so misconduct went undetected. It also described cases where salespeople asked customers for loans because their income was unstable, and paid part of customers’ premiums themselves to hit sales targets.
“We once again extend our deepest apologies to the customers and all other stakeholders who have been affected by this situation,” said Hiromitsu Tokumaru, president and CEO of Prudential of Japan.
Prudential said both insurers remain financially sound and able to meet their obligations. The suspensions do not affect Prudential Financial’s or PGIM’s other businesses in Japan, including Prudential Gibraltar Financial Life.
Gibraltar has contacted more than two million customers in recent months as part of its review.
Andy Sullivan, chairman and CEO of Prudential Financial, said Japan remains one of the group’s most important markets and that the work underway is meant to build a stronger foundation for the future.
The case is a stark example of what can go wrong when pay for a captive sales force depends heavily on new business. Prudential of Japan relies mainly on its own Life Planner sales staff. The company’s own findings link misconduct to pressure on income and targets, which led some salespeople to borrow from clients or quietly fund premiums themselves.
The FSA’s decision to exempt Gibraltar’s independent agency channel is significant. It suggests the regulator sees the risk as concentrated in the employed sales model, rather than in distribution through independent intermediaries.
For life insurers and distributors elsewhere, including in the US where Prudential Financial is headquartered, the lessons are about incentive design and supervision. Sales managers need clear oversight of close relationships between agents and clients. Compensation structures that reward volume above all else should be stress-tested for the conduct risks they create.
