Japanese used car dealer admits to company-wide insurance fraud

Japanese used car dealer admits to company-wide insurance fraud | Insurance Business Asia

Motor & Fleet

Japanese used car dealer admits to company-wide insurance fraud

27% of employees said that they were involved in intentionally damaging vehicles to inflate insurance claims

Motor & Fleet

By
Kenneth Araullo

Bigmotor, a major used car dealership in Japan, has admitted to making fraudulent insurance claims by intentionally damaging the cars of its customers.

The dealership submitted a report on the issue, compiled by a group of lawyers for insurance companies that were affected by the fraudulent schemes.

According to a report from NHK, Bigmotor workers smashed headlight covers or scratched car bodies to pad repair charges and received more insurance claims than they were due. A survey conducted by the lawyers found that 27% of employees said they were involved in the scheme to intentionally damage vehicles, leading to inflated insurance claims.

Further, the report said that factory chiefs were involved in the fraudulent acts due to tough sales quotas and pressure coming from the company headquarters. Since August 2020, Bigmotor executives have also demoted 47 factory chiefs due to poor performance in areas such as cleanliness and keeping factories tidy and in order.

The lawyers’ report pointed to a twisted corporate culture in which employees obeyed instructions from executives as disobeying could lead to demotions and a major reduction in their basic salary. These demotions were reportedly made without giving employees the chance to explain or without discussions during the in-house compensation committee meetings, as was stipulated in Bigmotor’s work rules.

The country’s transport minister, Saito Tetsuo, said that the ministry plans to conduct an interview with Bigmotor over the issue. Meanwhile, the dealership’s founder and president, Kaneshige Hiroyuki, will return one year’s worth of compensation as a result of the scandal.

Bigmotor also pledged to implement measures to prevent such a company-wide incident happening again, as well as making efforts to regain the trust of the public.

Elsewhere in the country, four of Japan’s biggest insurers were also in hot water recently over allegations of the formation of a cartel to adjust fire insurance premiums for a corporate client.

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