What happened?
Bigmotor, a used-car sales and repair group, carried out fraudulent auto-insurance claims that included unnecessary repair work, billing for work not performed, and charging for parts that were not used. In 2022, Sompo Japan and other insurers suspended their repair-shop referral programs (DRS: Direct Repair Service) to Bigmotor. Sompo Japan then resumed its own referrals in July without completing the additional investigation that had been under consideration.
SOMPO Holdings established an external committee of three lawyers on August 7, 2023. The committee reviewed documents and electronic communications, interviewed 78 people, and conducted additional internal and external surveys. It examined the decision to restart referrals, Sompo Japan’s internal controls, reporting to the parent company, and the information gap between frontline staff and management. The final public report was published on January 16, 2024 and runs 87 PDF pages. The English text below is a From Reports translation and summary of the Japanese original; translated wording is not an official translation.
Background overview: SOMPO Holdings (Wikipedia) / Big Motor (Wikipedia)
Twelve passages that stood out
The report is especially revealing about how Sompo Japan responded to signs of Bigmotor’s fraudulent claims. Repair shops were described in terms of the insurance business they generated; altered investigation sheets had reached the insurer; and a plan for further investigation changed at a meeting just hours later. These twelve passages show what information reached whom—and where decisions took a different turn.
Repair shops that generated more insurance business were called 'high-resource-value shops'
DRS was a system for introducing accident customers to repair shops. The report says some repair shops treated referrals from Sompo Japan as support for their core repair business and, in return, gave Sompo Japan’s insurance products preferential treatment.
Sompo Japan had an internal label for repair shops where that effect was especially valuable, and sales units tended to prioritize referrals to them. Bigmotor also allocated compulsory and voluntary insurance business among insurers in line with referral volumes.
Repair shops expected to generate more insurance business in return were called “high-resource-value shops.”
The committee says the sales-policy value of DRS came to receive particularly strong emphasis compared with its customer-satisfaction and claims-handling purposes.
Twenty-four of 32 plants were rated poor. The next year, all 30 plants reviewed were yellow or red
Sompo Japan monitored estimates and repair quality at Bigmotor plants. In fiscal 2020, 24 of 32 plants were rated poor in both the first and second halves of the year.
In the first half of fiscal 2021, simplified reviews covered 30 plants: 15 were rated yellow and 15 red. Every plant reviewed was therefore in one of the poor categories.
All 30 Bigmotor plants reviewed in the first half of fiscal 2021 were rated either yellow or red.
The committee says there were numerous inadequacies in decisions about whether simplified reviews should continue and whether further verification was needed.
A secondee reported that instructions were starting to run: 'We will make this claim, so do this work'
In December 2020, a Sompo Japan adjuster seconded to Bigmotor shared information about the company with the property-damage supervisor in Sompo Japan’s claims-service unit responsible for Bigmotor. The message said people had begun carrying out work that was not needed in order to achieve numerical targets and then billing for it.
It also said instructions apparently had begun to start with the desired claim and tell the shop floor what work to perform to match it. The report could not confirm that the supervisor passed this information to other Sompo Japan officers or employees.
A secondee reported that instructions apparently were beginning to flow along the lines of: “We will make this claim, so do this work.”
Around the same period, the sales unit also received concern that plant managers, fearing criticism in a group LINE chat, might try to manufacture sales in ways that could lead to improper claims.
Statement recorded by the committee
Information passed from a secondee to a Sompo Japan claims-service manager in December 2020, summarized by the investigation committee. Site translation from the Japanese original.
To achieve the numerical targets, they had begun billing for work that did not need to be done by actually performing it (for example, applying body filler and painting as though damage existed, or simply painting).
'Instructions from the plant manager' were rewritten into a version without those instructions
In 2022, three insurers asked Bigmotor to conduct its own investigation. The investigation sheets initially included findings indicating that plant managers had instructed improper conduct.
A Bigmotor executive then ordered those parts changed. A Sompo Japan secondee sent Sompo Japan both the before-and-after versions and communicated that they differed.
The parts recording instructions from plant managers were altered at Bigmotor’s direction.
By early July, the substance of the alterations had also been shared with Sompo Japan’s management, including its president.
At 8 a.m. the direction was to investigate all 24 plants concerned. At the 11 a.m. meeting, the decision shifted to restarting referrals
At an 8 a.m. preparatory meeting on July 6, 2022, participants accepted that keeping DRS suspended would hurt revenue but confirmed a direction of requesting additional investigation at all 24 Bigmotor plants concerned.
At a meeting from 11:00 to 11:30 that same day, however, the president proposed emphasizing prevention measures and restarting DRS. No participant ultimately maintained an objection to the restart.
At 8 a.m. the direction was further investigation. At the 11 a.m. meeting, the opposite decision—to restart referrals—was made.
The committee describes the change in direction as an abrupt turn.
The meeting was not meant to decide a restart. There were no materials, and legal/compliance and PR were not in the room
The 11 a.m. meeting had originally been arranged to discuss how to handle an upcoming visit from Bigmotor’s president. It was not intended to debate the major decision of restarting DRS, and no dedicated materials had been prepared for that decision.
There were also no attendees from legal/compliance or other control functions, and no public-relations representative.
It was not a meeting set up to decide the restart: there were no restart materials and no legal/compliance or PR representative in the room.
Even so, the decision was reached in about 30 minutes. The committee later said the meeting was not structured in a way suitable for making an important management decision.
The regulator was not told that Bigmotor's investigation sheets had been altered
On July 19, 2022, Sompo Japan’s research department submitted a written report to the Financial Services Agency, while its legal and compliance department submitted one to the Kanto Local Finance Bureau, saying referrals to Bigmotor would restart.
The report did not disclose that earlier versions of the investigation sheets existed or that Sompo Japan knew the sheets had been changed.
The fact that Bigmotor’s internal investigation sheets had been altered was not included in the report to the regulator.
The material submitted to the Financial Services Agency said differences remained between the investigation results and the information provided, but no plant-manager instructions had been established because there had been no admission.
Two other insurers sharply criticized the restart. The seriousness of that reaction did not fully reach the president
Before restarting DRS, Sompo Japan told two other insurers what it intended to do. Both sharply criticized or challenged the idea of Sompo Japan restarting on its own without carrying out the additional investigation.
The reaction was reported to Sompo Japan’s president, but not in concrete or detailed form.
The other insurers’ strong criticism was reported upward, but its seriousness did not fully reach the president.
The committee says this reporting deficiency may have been one reason an opportunity to reconsider the restart was lost.
Investigation committee finding
Committee narrative; the second sentence recounts a Bigmotor employee's statement. Site translation from Japanese; quotation ends mid-sentence.
They considered that resuspending DRS required a new justification, such as evidence that Bigmotor had been involved in the misconduct as an organization, and did not immediately suspend DRS again. After that, another insurer continued its own investigation, and an employee at a Bigmotor repair shop stated that, on the plant manager's instructions, workers had performed unnecessary work listed in the work order and inflated insurance claims were being made [remainder omitted]
Legal and compliance knew about the issue, but regarded it as outside its jurisdiction
Sompo Japan’s legal and compliance department had been aware of the matter since around February 2022. By July 6, its head had also received an outline of the fact that parts of the investigation sheets recording plant-manager instructions had been altered.
The department did not take an active role and did not bring the matter before the internal management committees. Its head explained that the case involved fraudulent claims at repair shops, not misconduct by insurance solicitors, and was therefore understood to belong primarily to another department.
The information was reaching legal and compliance, but the department viewed the matter as outside its jurisdiction.
The external committee concluded that responsibility for taking ownership of the issue was unclear and that the compliance framework had become dysfunctional.
The 30-minute restart decision was not even reported afterward to the board
Restarting DRS was an important management decision involving a major agency relationship and the repair shops recommended to customers. Yet it was not considered through a formal management meeting with careful preparation. It emerged from the flow of an informal executive meeting.
The decision was not even reported to the board afterward.
The committee called the way the restart policy was decided “shoddy,” and noted that the board was not even given a post-decision report.
A footnote adds that the head of claims-service planning raised the need for further investigation but could not maintain an objection to the restart in the final decision.
SOMPO Holdings did not learn about the case until an article criticized the restart
Sompo Japan had been dealing with the Bigmotor claims issue since early 2022 and had already restarted DRS in July.
The first report to parent company SOMPO Holdings came on August 29, after an online article criticized the restart. Until that point, the parent company had not been aware of the fraudulent-claims case.
The first report to the parent company came on August 29, the day an article criticizing the DRS restart appeared.
The committee says later reporting also omitted negative information such as the alteration of Bigmotor’s investigation sheets and instead largely explained why Sompo Japan believed its own response had been appropriate.
The committee asked whether staff would entrust their own cars to those repair shops
In its analysis of causes, the committee says restarting DRS before repair quality could be assured could reasonably be regarded as putting customer interests second. It identifies an underlying tendency to prioritize Sompo Japan’s own top line, market share, and agency relationship.
Rather than leaving the issue at an abstract call for a “customer perspective,” the report turns it into a personal test for Sompo Japan employees.
If employees who knew the quality of Bigmotor’s repair shops needed their own cars repaired, would they really accept being referred there?
The committee says placing genuine customer interests first is something those responsible for the auto-insurance system must keep firmly in mind.
What the report says about the background
The committee linked substantial staffing reductions intended to improve productivity to a weakening of the claims-service function. It said staff shortages left repair-shop monitoring incomplete, allowing Bigmotor shops to remain under simplified review when they should have moved to general review (printed pp.58–59).
Corrections to this article
Note 03 identifies the property-damage supervisor who received the secondee’s December 2020 information and adds that further sharing of the same information was not confirmed (p.27). Note 05 specifies the 24 plants concerned, rather than all Bigmotor plants, and clarifies that the restart decision was made at the meeting beginning at 11 a.m. (pp.41–42). Note 07 separates the documented regulatory report from the removed general analysis. Note 10 adds the footnote explaining that the claims-service planning head raised the need for further investigation but could not maintain an objection to the final restart decision (pp.53–54).