Major insurer Sompo Japan has admitted failing to investigate suspicious activity involving used car dealer Bigmotor, even when it was confronted with a report of wrongdoing by one of its employees.
Officials of the Japanese insurer said that an employee on loan to Bigmotor filed a report last summer alleging that a local chief for the car dealer ordered its subordinates to carry out improper actions. Bigmotor itself confessed to company-wide insurance fraud in which employees would damage customers’ vehicles to inflate insurance claims.
According to a report from Asahi Shimbun, Sompo did not dig deeper into the report, opting instead to temporarily suspend a business arrangement it had with Bigmotor, a measure taken to make sure that such an incident did not happen again.
Sompo Japan has admitted the lack of care that was put into the matter and has since apologised. However, the insurer and two other major industry stalwarts – Tokio Marine & Nichido Fire and Mitsui Sumitomo – are still part of the ongoing investigations as regulators say that they may have had knowledge of the scheme and did nothing about it as part of a give-and-take relationship.
All three insurers were made aware of possible fraud in Bigmotor in as early as 2022. This came to a head in June last year, when all three asked the car dealer to investigate the allegations while ceasing recommendations to their policyholders.
An insider said that Sompo Japan was the largest in terms of policies sold at Bigmotor shops. Several sources also allege that the insurer was less than enthusiastic about investigating and following up on the fraud allegations. After suspending its recommendations temporarily, Sompo Japan later resumed recommending Bigmotor to policyholders in July of last year.
The scandal has resulted in major shifts for the car dealer; yesterday, its founder and president resigned after apologizing and absolving its top management of any wrongdoing.
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