Panel Criticizes Sompo Japan's Reinstatement of Business with Bigmotor

11 Oct, 2023

Panel Criticizes Sompo Japan's Reinstatement of Business with Bigmotor

A panel established by Sompo Holdings Inc. has publicly criticized top executives at Sompo Japan Insurance Inc., including President Giichi Shirakawa, for their swift decision to resume business dealings with Bigmotor Co. in July of the previous year. This decision, as outlined in the interim report released by Sompo Holdings, has been described as "too hasty and inappropriate." The crux of the issue lies in their knowledge of potential fraudulent activities within the used car dealer's insurance claims process, raising significant ethical and operational concerns.

The panel's findings indicate that the executives' actions demonstrated a notable lack of customer-centric thinking, with a clear prioritization of sales growth over customer protection and ethical concerns. Sompo Japan Insurance had engaged in a business relationship with Bigmotor Co., where damaged vehicles were introduced into Bigmotor's inventory. In return, the used car dealer reciprocated by distributing automobile liability insurance contracts based on the number of vehicles referred by the non-life insurer. This arrangement appears to have prioritized the pursuit of business opportunities over safeguarding against potential fraudulent activities, leading to significant criticism from the panel.

The report also underscored that the decision to quickly resume business dealings with Bigmotor was largely driven by concerns among Sompo Japan Insurance executives. These concerns primarily revolved around the fear of losing lucrative deals with Bigmotor to rival insurance companies, reflecting a focus on competition rather than ethical and compliance considerations.

The backdrop to this rebuke is the whistleblower reports that had emerged, indicating fraudulent activities involving Bigmotor Co. In response to these serious allegations, Sompo Japan Insurance, along with two other major non-life insurers, took the decision to cease customer referrals to Bigmotor in June of the same year. However, it's important to note that of these three insurers, only Sompo Japan Insurance opted to reinstate customer referrals to Bigmotor in late July.

This episode raises significant questions about the balance between business interests and ethical considerations within the insurance industry. It also underscores the importance of robust internal compliance measures and the need for vigilance in responding to whistleblower reports. The panel's public rebuke serves as a reminder of the broader industry's obligations to put customer protection and ethical business practices at the forefront, even in the face of competitive pressures.