Sompo Japan president to resign over Bigmotor insurance fraud scandal

Sompo Japan Insurance Inc. President Giichi Shirakawa will step down to take responsibility for the handling of a high-profile insurance fraud involving used car dealership and repair chain Bigmotor Co., the insurer’s parent company said Friday.

The major Japanese insurer’s close relationship with Bigmotor has come under scrutiny since the dealership chain was found to have charged excessive repair fees after intentionally damaging cars and to have made fraudulent insurance claims.

Sompo Japan, which has been sending a large number of employees on loan to Bigmotor, has been accused of overlooking the wrongdoing carried out by the dealership to avoid damaging their business ties.

At a press conference in Tokyo, Shirakawa, 53, said he volunteered to resign because his decision to resume business with Bigmotor after the allegations emerged last year, despite knowing there was still a possibility fraud had taken place, was inappropriate.

“I was not able to take a firm attitude toward Bigmotor because I was afraid there would be a backlash,” said Shirakawa, who became the president of Sompo Japan in April last year.

The scandal, which has been widely reported over the past few months, has sent a shockwave across the country. Hiroyuki Kaneshige, the founder and then president of the dealership, was forced to resign in July amid mounting outrage among customers.

Bigmotor’s employees were scratching the bodies of vehicles with screwdrivers and damaging their surfaces with golf balls to pad repair charges, according to a report compiled by a panel of outside lawyers set up by the dealership.

Japan’s Financial Services Agency is looking into the matter and is slated to conduct an on-site inspection of the insurer later this month.

At the press conference, Kengo Sakurada, CEO of Sompo Holdings Inc., the parent of Sompo Japan, said he is partly responsible for the scandal as he oversees the subsidiary, but said he will wait for the results of an investigation by external lawyers to see whether he should be subject to any punitive measures.