Bigmotor only the tip of the iceberg as another insurance fraud report surfaces

A whistleblower revealed documents pertaining to illicit acts

Bigmotor only the tip of the iceberg as another insurance fraud report surfaces

Motor & Fleet

By Kenneth Araullo

Following revelations about illicit insurance claims by scandal-ridden used car dealership and repair chain Bigmotor, additional cases have surfaced, which hints that recent troubles may only be the tip of an industry-wide iceberg.

Japanese publication Mainichi Shimbun received a whistleblower report from a dealership disclosing fraudulent claims that had not been previously reported, with G-after, a Tokyo-based used car dealership established in 2007, being placed under scrutiny. The company’s sales have surged over recent years, according to a credit research firm.

An employee from G-after shared concerns, presenting internal documents detailing the company's alleged illicit actions. The documents from fiscal 2022 revealed a substantial gap between the actual repair cost, approximately JPY150,000 (about $1,000), and the billed amount of around JPY480,000 (about $3,200) sent to the insurance company. The dealership profited from the difference, totalling approximately JPY330,000 yen (roughly $2,200).

Furthermore, it was revealed that the firm misled both insurance companies and customers by implying that repairs were made using new parts. Improperly repaired cars led to decreased value, resulting in complaints from some customers.

In the wake of the Bigmotor scandal, various companies have also been exposed for fraudulent insurance claims. Nextage, a major used car retailer in Nagoya, had employees orchestrate voluntary insurance in others' names on trade-in vehicles. Good Speed, another major used car dealer based in Nagoya, disclosed inappropriate insurance claims totalling about JPY630,000 (approx. $4,200) out of 1,051 claims made over four months.

The Japan Used Car Dealers Association, which includes about 10,000 used car dealerships across Japan, intends to collaborate with insurance firms to increase transparency in the vehicle insurance system and address this issue.

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