(Bloomberg) --Japan's insurance industry is reeling from a raft of scandals that have exposed companies' lax supervision of its employees, undermining trust in the sector at a time when the government is trying to drive more investment by individuals.
Dai-ichi Life Holdings Inc. became the latest firm to reveal misconduct, joining Japan's three other biggest life insurers including Sumitomo Life Insurance Co. in saying that employees, seconded to financial firms selling their insurance, mishandled data. Before August 2024, 64 seconded employees from Dai-ichi Life and units obtained more than 1,000 pieces of data without approval, the insurer said in a statement.
Prudential Financial Inc., meanwhile,
"If scandals of this magnitude continue to occur, distrust toward the industry itself could affect insurance sales," said Hajime Ota, a professor at Doshisha University who researches business administration.
Japanese insurers have been enmeshed in scandals in recent years including
The nation's Financial Services Agency is planning to set up a division to oversee the insurance and asset management industries, showing that banking regulators are serious about monitoring those sectors.
Japanese insurers' stocks have underperformed the broad market despite interest rate increases that tend to be a tailwind for their operations. In the past year, as the Topix benchmark jumped 42%, its insurance index gained 32%. The gauge for Japanese banks shot up 77% during the period.
Experts say that the misconduct is fueled in part by huge sales forces fighting for business from a shrinking population. The total outstanding balance of individual life insurance and annuity policies stood at ¥883.1 trillion ($5.8 trillion) at the end of fiscal 2024, down about ¥10 trillion from the previous year.
"Sales competition that disregards customers' needs has been increasing, and companies are unable to properly grasp what's happening in their sales fronts," said Nobuyasu Uemura, a professor at Fukuoka University and a former insurer employee. "It's important for companies to manage their operations without focusing too much on just sales and profits."
To contact the translator on this story:
Ken McCallum in Tokyo at kmccallum4@bloomberg.net
To contact the translation editor responsible for this story:
Ichiro Suzuki at isuzuki@bloomberg.net;
Ken McCallum at kmccallum4@bloomberg.net
