Japan's financial watchdog on Thursday ordered Sompo Japan Insurance Inc. and its parent Sompo Holdings Inc. to improve their operations over their involvement in used car dealer Bigmotor Co.'s insurance fraud scandal.
The major insurance group maintained business with Bigmotor despite being aware that the dealership had been making fraudulent insurance claims, the Financial Services Agency said.
The watchdog demanded the insurance firms rectify "the corporate culture in which the companies prioritize their profit over that of their customers," and clarify management's responsibility and strengthen their legal compliance.
Bigmotor charged excessive repair fees by intentionally damaging customers' cars and making fraudulent insurance claims. Sompo Japan, which sold a large portion of its auto insurance through Bigmotor, is accused of purposely ignoring the fraudulent practices to avoid damaging the business relationship. Sompo Japan also directed customers to Bigmotor for car repairs.
According to a report by a third-party probe panel, Bigmotor's employees damaged vehicle bodies in a number of ways, including using screwdrivers and golf balls.
Major insurance firms cut ties with Bigmotor in 2022 after a whistleblower within the dealership reported fraudulent insurance claims, but Sompo Japan resumed business with the company later that year.
