The Financial Services Agency (FSA) of Japan will take “strict action” in the ongoing case involving Bigmotor and seven nonlife insurers, the regulator said in response to queries from Insurance Business Asia.
In an email, the FSA said that it has already ordered the car dealer and three major insurers – Sompo Japan, Mitsui Sumitomo, and Tokio Marine & Nichido Fire – as well as four other mid-level firms to “submit reports under the Insurance Business Act in order to conduct thorough fact-finding, including an investigation into the causes of the incidents involving Bigmotor.”
“If, as a result of the fact-finding, we found that there is a problem with insufficient protection of policyholders in relation to a series of fraudulent acts, we will take a strict action in accordance with laws and regulations,” the regulator said.
The FSA also sent materials relating to the Insurance Business Act, which will be pertinent once the investigation ends, including the possible actions that will be taken against the entities. Currently, the regulator is enacting Article 128 under the act, which requires the involved firms to submit reports or materials concerning the status of business or property.
Possible actions doled out if there is evidence of fraudulent acts are listed under Article 132, which can necessitate full or partial suspension until certain measures are taken to ensure the soundness of the firms’ management. Article 133, on the other hand, orders a full or partial suspension of the business, the dismissal of company officials, or even the rescinding of the business’ license.
The FSA also noted that administrative actions will still be weighed based on certain aspects such as the severity of the act, the damage it did to customers, the period and repeatability of the act, the presence of intention and organizational feature, the presence of concealment, the appropriateness of the management behind the conduct, and more. It is worth noting that Sompo Japan already admitted to learning of and failing to act on suspicious activity in Bigmotor prior to this ongoing investigation.
Sompo’s Bigmotor troubles may not be its most pressing issue at this time. The three major insurers named in the car dealer’s scandal are also part of another investigation, this time around possible cartel and price-fixing activities. Together with Aioi Nissay Dowa, the four nonlife insurance firms allegedly colluded before the official bidding on a contract to insure Tokyu Corp. and Keisei Electric Railway.
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