Photo/Illutration From left, Sompo Japan Insurance Inc. President Giichi Shirakawa and Sompo Holdings Inc.’s Chairman Kengo Sakurada apologize and bow at the beginning of a news conference in Tokyo’s Shinjuku Ward on Sept. 8. (Tatsuya Shimada)

Sompo Japan Insurance Inc. President Giichi Shirakawa will step down to take responsibility for the company’s handling of alleged fraudulent insurance claims by leading used car dealer Bigmotor Co., the company announced on Sept. 8.

“We have received numerous criticisms regarding our handling of inflating claims for insurance payouts. I sincerely apologize for any inconvenience and concerns we have caused,” Shirakawa said and deeply bowed at the beginning of a news conference on the day. 

Chairman Kengo Sakurada of parent company Sompo Holdings Inc. also attended the news conference.

“I apologize for Sompo Japan's failure to take appropriate measures to protect policyholders,” he said.

Sompo Japan has a major business arrangement with Bigmotor.

In July last year, despite being aware of the suspected fraud, Shirakawa insisted on resuming his company's business ties to Bigmotor at an in-house meeting.

Sompo Japan then started recommending Bigmotor repair shops again to its policyholders.

“I made a major mistake in management and feel responsible,” Shirakawa said. “I deeply regret my thoughtless decision that failed to prioritize our customers.”

He added, “I should have taken a firm stance against Bigmotor’s misconduct, but I lacked that recognition.

“I take it very seriously that trust in the insurance company has been significantly lost,” he said, explaining his resignation.

Sompo Japan will decide on the official date of Shirakawa's resignation in light of the investigation being conducted by a third-party committee and the progress of the handover to his successor.

The company also announced that executive officer Koji Ishikawa will be appointed as vice president effective Sept. 8.

According to sources, Sompo Japan, Tokio Marine & Nichido Fire Insurance Co. and Mitsui Sumitomo Insurance Co. stopped referring vehicles involved in accidents to Bigmotor in June last year after in-house whistleblower reports from the company’s employees.

Bigmotor submitted a report to the insurance companies, claiming that the fraud was not intentional but “due to workers’ negligence.”

However, the report was suspected of rewriting the content of interviews with the employees who had accused the company of fraud.

Although some senior officials at Sompo Japan called for additional investigations, Shirakawa, who was concerned about his company's worsening relationship with Bigmotor, urged the resumption of referrals.

“After receiving a report from Bigmotor saying that there was no wrongdoing, I felt it would be quite difficult to make the company admit that it was operating under an organizational directive,” Shirakawa said. 

“We had strong concerns that business would shift significantly to our competitors,” he added. “Instead of spending time investigating the allegations, we decided that it would be better for both our customers and our company to resume business after making Bigmotor improve its business practices on the condition that it implements strict measures to prevent a recurrence."

After the scandal surfaced, Sompo Holdings formed an investigative committee of external lawyers to examine whether the decision to resume business dealings was appropriate.

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