As of Feb. 9, Prudential Life Insurance Company, Ltd. (Prudential of Japan) had received about 300 additional customer complaints linked to alleged monetary misconduct by its sales force, adding to a long-running investigation into fraud and mis-selling at the Japan subsidiary of Prudential Financial, Inc. The new complaints follow the establishment of a compensation committee on Jan. 23 and come on top of confirmed cases of fraudulent conduct stretching back more than three decades.
The latest wave of complaints coincides with Prudential of Japan’s decision to halt new sales for 90 days from Feb. 9. The company has voluntarily stopped issuing new policies while it reviews cases involving current and former employees who allegedly mishandled customer money or promoted inappropriate investments. Prudential of Japan said the temporary suspension is part of a broader set of operational, organisational, and governance changes tied to previously disclosed misconduct, including mis-selling and off-book investment solicitations involving both policyholders and non-policyholders.
“I would like to deeply apologise for the harm this matter has caused to our customers and stakeholders. The decision to enter into a voluntary suspension of new sales activity is an important step to rebuild trust and implement necessary changes to our organisation,” Hiromitsu Tokumaru, president and chief executive officer of Prudential of Japan, said. The pause follows an internal investigation disclosed in January 2026. The company has said it plans to reimburse affected customers, revise sales incentive structures, and increase oversight of sales practices, governance, and risk management. It has also said it will set up a customer reimbursement framework to address losses and related complaints.
According to The Japan Times, the newly filed complaints build on misconduct that Prudential Life Insurance in Japan has already reported. The company has said that 107 former and current employees defrauded around 500 customers of approximately ¥3.1 billion (about US$20 million) between 1991 and 2025. Much of the earlier misconduct was identified through a “customer confirmation” initiative launched in August 2024. Prudential of Japan contacted customers via letters, telephone calls, emails, newspaper notices, and its website to check whether they had experienced questionable monetary dealings with its sales staff. By early 2025, the company had sent about 2.09 million letters and made about 130,000 calls, and planned roughly 700,000 emails and notices in 40 national, regional, and local newspapers.
Through that process, the insurer confirmed three cases in which former sales employees improperly handled money connected to its systems or life operations, affecting eight customers and causing losses of about ¥60 million. The company said it is verifying each case and paying compensation. One Tokyo case involved a former sales employee in his 30s who used Prudential application documents and papers bearing the company’s name to solicit customer investments in a fictitious financial product, leading to losses of roughly ¥53 million for four customers. Prudential said it has compensated those customers under employer liability and is seeking to recover the money from the former employee, while police investigate.
In Kumamoto Prefecture, a former male sales employee in his 20s received about ¥7.2 million from three customers after citing the firm’s employee stock ownership plan and claiming there were “stocks that only employees can buy, guaranteeing absolute profit and principal security.” He has repaid two of the three customers; Prudential has said it will handle the remaining case based on confirmed facts and in coordination with law enforcement. A third case in Tokyo concerned a former sales employee in his 50s who advanced premiums that a customer was supposed to pay and later collected more than the amount advanced. Prudential of Japan said it has compensated the affected customers and plans to seek repayment from the former employee.
Beyond the frauds connected to Prudential’s own systems and products, the company has reported broader monetary misconduct by its sales force. It said 106 current and former employees took money from customers through activities not directly related to its life products, such as soliciting investments in external schemes or borrowing funds. The total amount received during and after employment was around ¥3.08 billion, with net exposure of about ¥2.29 billion after partial refunds. Prudential of Japan also found that 69 current and former employees introduced unapproved investment products and firms to roughly 240 customers. Those introductions resulted in customer payments of about ¥970 million during the employees’ tenure and ¥340 million after their resignation. While employees did not directly receive these funds, the insurer imposed disciplinary measures for violations of internal rules.
The expanding complaint volume has put Prudential of Japan’s “life planner” model and commission-only remuneration under closer industry scrutiny in Japan and across Asia. Under the model, each customer is assigned a single sales representative who provides ongoing life and financial planning advice. Compensation is heavily commission-based, with limited fixed salary. Market observers have suggested that this structure, combined with close customer–sales relationships, created conditions in which misconduct could develop. Some salespeople reportedly struggled to maintain income, increasing pressure to generate new business or obtain money directly from clients.
“It’s a business model that carries significant risks, and what happened is that those risks ultimately materialised. In a full-commission sales model, the reason such misconduct may have been avoided in the past was likely because of the company’s founding philosophy – a strong sense that providing life insurance to customers is the mission of every employee. At some point since the company’s founding, that philosophy may have been eroded along the way,” Nobuyasu Uemura, an insurance analyst and professor at Fukuoka University, said, as reported by The Japan Times. Uemura noted that while the commission model was imported from the US parent, Prudential Financial has since repositioned toward a broader financial services business. As a result, Prudential of Japan’s structure is relatively distinctive in the local market, where other major insurers do not operate purely on commission. So far, there has been no public indication that comparable misconduct has occurred at other large Japanese life insurers.
Prudential has changed senior leadership as the investigation has unfolded. On Feb. 1, Kan Mabara resigned as president and CEO of Prudential of Japan “to clarify management responsibility.” He was succeeded by Tokumaru, previously president and CEO of Prudential Gibraltar Financial Life Insurance Co., Ltd., who has more than 20 years of experience in insurance administration and sales management. The insurer said he had no prior involvement in managing Prudential of Japan before his appointment. At Prudential Holdings of Japan, Inc., the chairman and CEO resigned in October 2025 and Bradford O. Hearn became president and CEO.
Under a special project launched in December 2024, Prudential of Japan reviewed major misconduct cases, assessed risks in its commission-heavy sales model, and examined its control framework. The review pointed to gaps in sales supervision and incentive design, limited day-to-day monitoring by managers and head office, and a strong emphasis on production, as well as partial implementation of a three-lines-of-defence model and unclear allocation of responsibilities between the first and second lines.
The company has said it plans to change compensation for sales employees and managers so that compliance behaviour and after-sales service are reflected alongside new business in pay, awards, and promotions. It also plans tighter reporting of sales activities, more direct contact with customers by non-sales staff, stricter recruitment criteria, and updated training on inappropriate investment solicitations and related risks, along with governance and risk management changes. For insurers and regulators across Asia, where agency distribution and performance-based pay remain central to life business, the rising number of complaints at Prudential of Japan and its 90-day sales suspension are being watched as part of wider discussions about incentive structures, conduct risk, and oversight in commission-driven models.
