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Authorities investigate car repair insurance scandal

The Financial Services Agency (FSA) of Japan is investigating an insurance fraud at the used-car and vehicle-repair chain Bigmotor.

The dealership and car repair company is alleged to have deliberately damaged customers' vehicles and then received higher-than-actual repair costs from insurance companies.

The Jiji Press has reported that the FSA plans to order seven non-life insurers under the insurance business law to report on their ties with Bigmotor. The seven are four major insurers—Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance , Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance—and three medium-sized insurers, including Kyoei Fire & Marine Insurance.

Based on their reports, the FSA will investigate whether there have been problems in protecting policyholders.

Major non-life insurance companies introduced Bigmotor repair shops to policyholders who had been involved in motor accidents or other vehicle issues. The insurers seconded dozens of employees to Bigmotor also sold motor insurance policies to customers who purchased used cars at the dealership. The company allocated motor liability insurance deals to partner insurers based on the number of vehicles they referred to Bigmotor for repairs.

Furthermore, Bigmotor is suspected of having concluded fictitious automobile insurance contracts. According to people familiar with the matter, a Bigmotor outlet in Fukui Prefecture, central Japan, was found to have fabricated insurance contracts for vehicles including one scheduled to be scrapped.

The FSA is also investigating whether there were any problems with Bigmotor's operations as an insurance agent and is expected to order the company to submit a report on the matter shortly.



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