Life Insurance Was Supposed to Be Safe — Instead, Customers Lost $20 Million to Insider Fraud

Life insurance is supposed to ensure that your loved ones receive a lump-sum benefit when you pass away, offering certainty that your family will be financially taken care of in your absence. However, recent developments at a major company have shaken trust in the industry.

Over 100 employees of Prudential Life Insurance defrauded nearly 500 clients of close to $20 million (£14.6 million) over several years. In a press conference last week, the company apologised to clients for the fraudulent activities and promised to compensate those affected.

'Serious improper conduct spanning many years has come to light. For causing great anxiety and trouble to our affected customers, everyone in the life insurance industry and society at large, I offer my sincerest and deepest apologies,' said Prudential Life CEO Kan Mabara.

He added that a committee will be established to oversee client compensation. The third-party experts will evaluate each case to determine the monetary damages, which will be compensated by Prudential Life.

'I promise that we will handle this in good faith, prioritising the full recovery of our customers' damages,' Mabara stated.

Insights Into the Decades-Long Scandal

Prudential's apology comes a week after an announcement that 107 current and former employees of the company were involved in improper conduct toward 503 clients between 1991 and 2025.

The fraud included defrauding clients with fictitious profit-making investment schemes and borrowing money without repaying it. The company shared earlier that Mabara would step down to take responsibility for the scandal, effective 1 February, and initially only released documents without holding a news conference. However, Prudential was compelled to change course after facing calls for accountability and inquiries from clients.

During the investigation, Prudential found that three former employees had fraudulently obtained money related to the company's systems and insurance operations. They allegedly defrauded eight clients while they were still employed. Elsewhere, a former employee at the Kumamoto branch allegedly solicited funds between 2021 and 2025 by saying: 'There are shares that only Prudential employees can buy. Profits are guaranteed, and the principal is protected, so would you entrust me with your money?'

Another former employee at the Shiodome branch in Tokyo approached clients with a fictitious investment scheme between 2017 and 2023 by exploiting the company's application documents.

Separately, Prudential also confirmed that an investigation revealed that several employees are suspected of illegally securing customer information and using it at their new jobs; the results of that investigation are yet to be made public.

Prudential Striving to Win Back Trust

During the news conference, Prudential Holdings of Japan CEO Bradford Hearn mentioned that the committee is treating the fraud scheme seriously and the company will prioritise bolstering senior leadership and supervision to win back lost trust.

Regarding the scandal, Mabara said the Prudential valued 'the autonomy and independence' of sales staff, but 'it went too far,' adding that the company's oversight systems were inadequate.

Among the several safeguards the company is adopting to undo the impact of the scandal and ensure it does not happen again are reviewing the existing performance-based compensation structure and awards systems for sales employees.

The company will also overhaul the risk sensitivity of the management team and reform an organisational culture that treated its business model as infallible.