Several non-life insurance companies have identified tens of thousands of fraudulent claims from Bigmotor, a used car dealer now out of business.
The fraudulent claims reportedly involved the company inflating repair bills by damaging vehicles sent in for accident repairs.
According to a report by The Asahi Shimbun, sources familiar with the investigation said four major non-life insurance firms – Sompo Japan Insurance Inc, Mitsui Sumitomo Insurance Co, Tokio Marine and Nichido Fire Insurance Co, and Aioi Nissay Dowa Insurance Co – have found that approximately 65,000 claims submitted by Bigmotor were fraudulent.
Adjusting these claims with Balm Co, which was established to handle damage compensation after Bigmotor’s dealership network was spun off into Wecars Co, has been challenging.
As of now, the insurers and Balm have managed to agree on adjustments for about 1,700 claims, representing only 2.6% of the total claims under review, the sources said.
Balm, which has been reviewing claims using archived documents and images, has stopped its investigation, according to the sources. The company informed the insurers that these records are often insufficient to verify the claims’ accuracy.
Balm has also stated that it will now handle the matter through court mediation, the sources indicated.
A senior official from one of the non-life insurance companies described Balm’s decision to halt its investigation as unexpected.
Bigmotor was found to have inflated auto insurance bills and overcharged insurers for vehicle repairs. In some instances, employees allegedly damaged vehicles to increase repair costs.
The four non-life insurers have conducted independent investigations of Bigmotor’s claims. They compared their findings with Balm’s to determine the amounts to be refunded to both the insurers and their policyholders. The inflated claims had caused an increase in monthly insurance premiums for motorists.
The insurers reviewed claims filed over the past five to eight years:
By early July, the companies had completed reviews for nearly 80% of the approximately 236,000 claims combined.
Around 65,000 claims, or about 30% of those reviewed, were found to be fraudulent, according to the sources.
