Prudential Life Insurance Co., a foreign-affiliated company, has announced that about 100 employees and former employees had conducted improper business practices. They offered customers investments in fictitious financial products or asked customers to loan them money, receiving a total of ¥3.1 billion from about 500 customers.
The misconduct had been occurring since 1991. Some of them used funds obtained by improper means to purchase high-priced items such as automobiles and watches. About ¥2.3 billion remains unreturned to victims.
Prudential’s parent company is one of the largest insurance and financial services institutions in the United States. Its Japanese arm was established in 1987 and has now become one of Japan’s major life insurance companies.
It is utterly appalling that they defrauded their customers of money against the background of their company’s strong brand. This is a malicious act that undermines public trust in the insurance industry.
Prudential announced the investigation results on Jan. 16, but initially did not hold a press conference. The company also severely lacks the attitude of fulfilling its accountability.
Despite such a significant problem, Prudential said that it will not conduct a third-party investigation. This is utterly incomprehensible. As an organization, why couldn’t the company grasp the problem and work to rectify it at an early stage? Clarifying the truth is essential to restore customer trust.
Life insurance sales staff are required to take a customer-oriented approach to caring for customers’ future concerns, such as over illness, nursing care and life after retirement. It is utterly unacceptable for them to take advantage of relationships they have built through selling life insurance products to defraud customers of money and borrow money from customers, among other improper conduct.
The company’s corporate culture, which attaches too much importance to sales performance, is said to have fostered this misconduct.
Prudential referred to its sales staff as “life planners,” indicating a business model of building close, long-term relationships with customers.
However, the sales staff’s compensation system was commission-based, with salaries fluctuating significantly depending on sales performance, and the company also had a lavish awards system for employees who achieved good performance. From the third year of employment, sales staff with poor sales performance could receive only the minimum wage level under this system.
This extreme performance-based system likely created a breeding ground for misconduct. Sales staff were granted broad discretion similar to that of sole proprietors, and the company’s legal compliance system was neglected.
Regarding the about ¥2.3 billion unreturned to victims, the company said that it will establish a committee composed of experts to advance compensation for them. This process must proceed swiftly to dispel customers’ anxiety.
The misconduct had been occurring since 1991. Some of them used funds obtained by improper means to purchase high-priced items such as automobiles and watches. About ¥2.3 billion remains unreturned to victims.
Prudential’s parent company is one of the largest insurance and financial services institutions in the United States. Its Japanese arm was established in 1987 and has now become one of Japan’s major life insurance companies.
It is utterly appalling that they defrauded their customers of money against the background of their company’s strong brand. This is a malicious act that undermines public trust in the insurance industry.
Prudential announced the investigation results on Jan. 16, but initially did not hold a press conference. The company also severely lacks the attitude of fulfilling its accountability.
Despite such a significant problem, Prudential said that it will not conduct a third-party investigation. This is utterly incomprehensible. As an organization, why couldn’t the company grasp the problem and work to rectify it at an early stage? Clarifying the truth is essential to restore customer trust.
Life insurance sales staff are required to take a customer-oriented approach to caring for customers’ future concerns, such as over illness, nursing care and life after retirement. It is utterly unacceptable for them to take advantage of relationships they have built through selling life insurance products to defraud customers of money and borrow money from customers, among other improper conduct.
The company’s corporate culture, which attaches too much importance to sales performance, is said to have fostered this misconduct.
Prudential referred to its sales staff as “life planners,” indicating a business model of building close, long-term relationships with customers.
However, the sales staff’s compensation system was commission-based, with salaries fluctuating significantly depending on sales performance, and the company also had a lavish awards system for employees who achieved good performance. From the third year of employment, sales staff with poor sales performance could receive only the minimum wage level under this system.
This extreme performance-based system likely created a breeding ground for misconduct. Sales staff were granted broad discretion similar to that of sole proprietors, and the company’s legal compliance system was neglected.
Regarding the about ¥2.3 billion unreturned to victims, the company said that it will establish a committee composed of experts to advance compensation for them. This process must proceed swiftly to dispel customers’ anxiety.
