Several major non-life insurance companies in Japan have unearthed a substantial fraud scandal involving Bigmotor, a used car dealership that has since ceased operations. Reports indicate that Bigmotor inflated repair bills by intentionally damaging vehicles sent in for repairs, resulting in approximately 65,000 fraudulent insurance claims.
The Asahi Shimbun reports that four leading insurance firms—Sompo Japan Insurance Inc., Mitsui Sumitomo Insurance Co., Tokio Marine and Nichido Fire Insurance Co., and Aioi Nissay Dowa Insurance Co.—have uncovered these fraudulent activities. The insurers have struggled to resolve discrepancies in claims adjustments, as the repair bills from Bigmotor were grossly inflated.
Balm Co., a firm created to manage damage compensation following the divestment of Bigmotor’s dealership network into Wecars Co., has faced difficulties in adjusting the fraudulent claims. To date, Balm and the insurers have managed to finalize adjustments for only about 1,700 claims, which constitutes a mere 2.6% of the total under review. Balm has ceased its investigation, citing inadequate archived documents and images as reasons for its inability to verify the claims.
Balm has now decided to address the issue through court mediation. A senior official from one of the affected insurance companies described Balm’s decision to suspend its investigation as surprising.
The inflated claims from Bigmotor led to higher insurance premiums for motorists, as insurers were overcharged for vehicle repairs. Investigations by the four insurance companies revealed the extent of the fraudulent activity, with the following claims reviewed:
- 115,000 by Sompo Japan
- 50,000 by Mitsui Sumitomo
- 49,000 by Tokio Marine and Nichido Fire
- 23,000 by Aioi Nissay Dowa
By early July, the insurers had completed reviews for nearly 80% of the approximately 236,000 claims submitted. Of these, around 65,000 claims—about 30%—were confirmed to be fraudulent.
