Sompo Japan Insurance Inc. has punished 584 people in the wake of a business suspension order it received for misconduct related to thousands of cases of unpaid insurance benefits, the company said.
The punishment includes a 30 percent cut in President Masatoshi Sato's executive compensation for six months and pay reductions for 25 board members and five auditors.
The rest consists of 30 board members, five auditors and 549 employees. Five former executives, including former President Hiroshi Hirano, were not punished because they have already resigned.
The Financial Services Agency ordered the nonlife insurer on May 25 to partially suspend operations for up to three months.
The scope of the punishment is the largest-ever by a domestic insurer. The second-largest occurred when Meiji Yasuda Life Insurance Co. reprimanded 120 employees after the FSA penalized it with a similar order.
The company was "suffused by an atmosphere of putting priority on profits," Sato said at a news conference to announce the punishment.
The misconduct at Sompo Japan included the practice of paying premiums on behalf of customers to raise sales performance.
The FSA orders include a two-week ban on the soliciting or selling of auto insurance and other mainstay products beginning June 12, and a one-month prohibition on life insurance products until July 11.
Created through the 2002 merger of Yasuda Fire & Marine Insurance Co. and Nissan Fire & Marine Insurance Co., Sompo Japan is the country's second-largest property and casualty insurer in terms of net premium revenues and has a workforce of around 14,000.
The company submitted a business improvement plan to the FSA on Monday that contains steps to ensure thorough legal compliance.