The president of Sompo Japan Insurance, Giichi Shirakawa, will leave his position to assume responsibility for the management of a high-profile insurance fraud case involving the used car dealership and repair chain Bigmotor.
As reported by Kyodo News, the major Japanese insurer’s close relationship with Bigmotor has come under scrutiny since it was discovered that the dealership chain had charged excessive repair fees after intentionally damaging cars and had filed fraudulent insurance claims.
Sompo Japan, which had loaned many employees to Bigmotor, has been accused of overlooking the dealership’s irregularities to avoid damaging its business ties.
At a news conference in Tokyo, Shirakawa, 53, said he had offered his resignation because of the inappropriateness of his decision to resume business with Bigmotor despite knowing that fraud allegations that emerged last year could be true. .
“I was not able to take a firm attitude toward Bigmotor because I feared possible repercussions,” said Shirakawa, who became president of Sompo Japan in April last year. The specific date of his resignation is yet to be determined.
The scandal, which has been widely reported in recent months, has shocked the entire country and led to the resignation of Hiroyuki Kaneshige, the dealership’s founder and president, in July amid growing customer outrage.
Bigmotor employees scratched vehicle bodies with screwdrivers and damaged their surfaces with golf balls to cushion repair costs, according to a report by an independent group of lawyers appointed by the dealership.
The scandal exposed a close relationship between Sompo Japan and Bigmotor, which sold liability insurance for the insurer as an agent. Sompo Japan, in turn, introduced its customers to Bigmotor to repair their cars.
Of the total value of insurance the dealership sold in fiscal 2022, about 60% went to Sompo Japan, according to the insurer.
Shirakawa said he resumed business with Bigmotor in July last year, a month after the company’s decision to stop referring customers to the dealership for auto repairs, fearing it would lose business to its rival insurers.
“I feared a significant drop in sales,” says Shirakawa. “It was a mistake”.
Japan’s Financial Services Agency is investigating the matter and plans to conduct an on-site inspection of the insurer later this month.
At the press conference, Kengo Sakurada, CEO of Sompo Holdings Inc, parent company of Sompo Japan, said that he is partly responsible for the scandal, since he supervises the subsidiary, but stated that he will wait for the results of an investigation by lawyers. to see if he should be subject to any punitive measures.