Japanese Used-Car Exec to Step Down After Revelations of Fraudulent Insurance Claims

The president of Japanese used-car dealership Bigmotor Co. Ltd. said he will step down after revelations of fraudulent insurance claims by the company’s repair shops, a scandal that has also ensnared Sompo Japan Insurance Inc.

“I deeply apologize to all of our stakeholders,” Bigmotor President Hiroyuki Kaneshige said at a news conference on Tuesday. He denied any involvement by the company’s top management.

Bigmotor has admitted to deliberately damaging vehicles and padding insurance claims. According to an outside investigation earlier this month, some managers dented customers’ vehicles by hitting them with golf balls stuffed inside socks.

Separately, Sompo Japan Insurance Inc. said it will conduct an investigation into Bigmotor and “deal strictly” with the matter. Bigmotor repairs cars covered by Sompo, the insurance unit of Sompo Holdings Inc.

The insurer has seconded 37 employees to the dealership since 2011, according to a Sompo spokesperson, although media reports have said those employees deny they knew about the fraud. Sompo Holdings shares extended their recent decline [on Tuesday, July 25], at one point falling more than 3%.