Prudential Life Insurance sales staff worked under an intense performance-based system that was a major factor behind the rampant misconduct uncovered at the company, newly appointed CEO Hiromitsu Tokumaru said Tuesday.
The company is under fire for various fraudulent activities by 107 former and current employees who took advantage of their position as a “life planner” to defraud around 500 customers of a total ¥3.1 billion ($19.9 million) between 1991 and 2025.
“I am truly sorry that issues related to our compensation system, management structure, and organizational culture led some employees to become involved in this kind of financial misconduct,” Tokumaru said in a news conference in Tokyo.
“Through these reforms, we want to return to Prudential Life’s core strength and founding principle of supporting our customers throughout their entire lives by providing life insurance,” he said.
The company also announced that it would establish a third-party panel of lawyers to further investigate issues with the company’s governance system.
Compensation at Prudential depended heavily on how many new deals an employee is able to close each month, meaning that salaries varied based on performance. At times, employees struggled to make ends meet.
There are currently over 4,000 life planners at the company but around 500 employees quit each year.
Another factor that led to the misconduct, which includes soliciting investment products not connected to the company’s insurance business and taking personal loans from customers, was the extremely close and private relationship that life planners had with their clients.
Prudential had operated on a “my client” business model in which a life planner is assigned to work with a specific customer, who would entrust them to map out their life plan.
The company gave employees room to work independently, with very little oversight from management.
Last week, the company announced a 90-day voluntary business suspension on new sales in order to implement organizational and work culture reforms. The business suspension started Monday. The company has also suspended the hiring of new employees as well.
Tokumaru said the company is aiming to shift its business model to an “our-client” model, in which every customer would have a support team instead of a single consultant. Reforms would also address the compensation system to make it less stressful and competitive.
A committee in charge of compensating affected customers was set up at the company on Jan 23. As of Monday, about 300 customer compensation claims have been made against Prudential employees, which the company said it would continue to investigate.
Prudential faces a $350 million drop in profits, factoring in the compensation, the 90-day sales hiatus, and the backlash from the scandal overall.
Source – https://www.japantimes.co.jp/business/2026/02/10/companies/prudential-life-new-ceo/