Japan sends out probe on insurers post-forgery allegations

The on-site inspections aim to seek other issues related to the protection of policyholders.

Japan's Financial Services Agency (FSA) is set to launch on-site inspections of both Bigmotor Co. and Sompo Japan Insurance Inc. in the coming weeks, possibly starting in mid-September, reported Jiji Press.

This move is part of a broader investigation into fraudulent auto insurance claims linked to the used car dealer.

If the inspections uncover issues related to the protection of policyholders, the FSA has indicated that it may take further actions, including the issuance of administrative punishments such as business improvement orders.

READ MORE: FSA to Conduct On-Site Inspections of Bigmotor, Sompo Japan

To recall, a used car dealer, Bigmotor Co., is suspected of engaging in fictitious automobile insurance contracts.

The company's outlet in Fukui Prefecture, central Japan, was reportedly found to have fabricated insurance contracts, including for vehicles slated to be scrapped. 

This act, apparently aimed at inflating the number of insurance contracts, may be a violation of the insurance business law.

ALSO READ: Japanese auto dealer allegedly forged insurance contracts: report

As a result of these revelations, the FSA summoned Bigmotor's executives to the Kanto Local Finance Bureau to inquire about inappropriate insurance sales and the effectiveness of the company's compliance system.

Further, an investigation report by external lawyers revealed that Bigmotor employees inflated maintenance fee claims to nonlife insurance firms by deliberately damaging cars.