Frequent scandals in the Japanese insurance industry! All four major life insurance giants are involved, exacerbating the trust crisis and potentially becoming a "poison" for stock prices.

The Japanese insurance industry is in turmoil due to a series of scandals. As Japanese authorities attempt to encourage individuals to increase their investments, these scandals, which have exposed the lack of supervision over employees by insurance companies, have weakened public trust in the industry. It has been reported that Dai-ichi Life Holdings has become the latest company to disclose misconduct. The company, along with three other major life insurance companies in Japan including Sumitomo Life Insurance Company, stated that employees stationed at Financial Institutions, Inc. who sell their insurance products engaged in improper data handling. Dai-ichi Life Holdings stated that 64 stationed employees from the company and its subsidiaries obtained over 1,000 pieces of data without authorization before August 2024. Meanwhile, Prudential Financial, Inc. (PRU.US) suspended the sale of new life insurance products in Japan for 90 days earlier this month after disclosing improper sales behavior by employees. Japanese insurance companies have been involved in scandals such as price manipulation and improper sales in the past, but the latest turmoil comes at a particularly sensitive time for the financial industry. With the aging population worsening, policymakers are working to shift household assets from savings to investments. The Financial Services Agency of Japan plans to establish a department specifically for regulating the insurance and asset management industries, highlighting the policy level attention to insurance companies. Hajime Ota, a professor at Tokai University who studies enterprise management, stated: "If scandals of this scale continue to occur, it could affect trust in insurance sales within the entire industry." Although rising interest rates are generally favorable for insurance companies, the performance of Japanese insurance stocks has lagged behind the broader market. In the past year, the TOPIX index has risen by 42%, while the insurance index has only risen by 32%; during the same period, the Japanese bank stock index has surged by 76%. Experts point out that these improper behaviors stem from a large sales force competing fiercely for business in a shrinking population market. As of the end of the 2024 fiscal year, the total balance of individual life insurance and pension policies in Japan was 883.1 trillion yen (approximately $5.8 trillion), a decrease of around 10 trillion yen from the previous fiscal year. Nobuyasu Uemura, a professor at Fukuoka University and a former insurance industry practitioner, stated: "Sales competition that ignores customer needs is intensifying, and companies are unable to effectively monitor what happens in frontline sales. Companies, in managing operations, should not overly focus on sales and profits."