Japan’s Financial Services Agency (FSA) has ordered two life insurers owned by Prudential Financial to stop soliciting new business until January 31, 2027, but has left Gibraltar Life’s independent agency channel free to keep selling. The orders are the latest step in a fraud scandal at the group’s employed sales forces 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) on October 9. Prudential of Japan cannot solicit new business from October 13 until January 31. Gibraltar Life Insurance Company received a partial business suspension order and an improvement order running to the same date. 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. According to Jiji Press, the FSA found that Prudential of Japan had failed to manage and supervise its sales employees adequately and that its internal systems to prevent misconduct were ineffective.
Prudential of Japan disclosed in January that 107 current and former employees had defrauded about 500 customers of roughly ¥3.1 billion (about US$20 million) 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, set up a program to reimburse affected customers, and pledged to restructure incentive pay and strengthen oversight of its sales practices. The suspension was later extended into November, and new policy sales at Prudential Life fell 90.7% year on year in the quarter to June, Insurance Business reported from Asia.
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.
Prudential of Japan’s president and CEO, Hiromitsu Tokumaru, again apologized to customers and other stakeholders. He and two other executives will voluntarily return 30% of their monthly pay for three months, and the insurer plans to introduce guaranteed minimum pay for sales staff from 2027, Jiji reported.
Prudential of Japan relies mainly on its own Life Planner sales staff, and the company’s findings tie the misconduct to pressure on income and sales targets. The planned minimum pay is a direct response to that pressure. The FSA’s order leaves Gibraltar’s independent agencies selling while its employed Life Consultants are suspended, so the same group is now operating under two different regimes depending on how its producers are engaged and paid.
The questions raised apply well beyond Japan, including in the US, where Prudential Financial is headquartered. Distributors with employed or captive producers face the same issues of how closely managers oversee relationships between agents and clients, and whether compensation that rewards volume above all else has been tested for the conduct risks it creates.
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 under way is meant to build a stronger foundation for the future.
