Insurance giant successfully sues 2 ex-staff who lured lucrative client to their future employer

SINGAPORE: While working for American reinsurance firm Guy Carpenter, two brokers lured a big client away to a new reinsurer that they helped to set up in Singapore, and which was to be their future employer.

Guy Carpenter estimated that the loss of business from the client, Samsung Fire and Marine Insurance (SFMI), cost it at least US$1.3 million in brokerage revenue.

The American firm, which employs thousands of staff across about 60 offices worldwide, sued its two ex-employees as well as South Korean reinsurer LK Insurance Services and its local subsidiary LK Re in Singapore's High Court.

On Wednesday (Dec 3), all four defendants were found liable for taking part in a conspiracy using unlawful means against Guy Carpenter by diverting its business to LK Re.

The level of damages to be paid by the defendants to Guy Carpenter will be assessed separately, along with legal costs.

Judicial Commissioner Mohamed Faizal noted the defendants' argument that clients are free to decide where to take their business.

While this is "technically true", it "entirely misses the point", he said in a written decision.

"For the system to function coherently, and for wider commercial relationships to be sustained with any degree of integrity, it is essential that employees are duty-bound to act in good faith to advance the interests of their current employers, rather than (as was the case here) quietly facilitating client migration in anticipation of profiting from future roles elsewhere," he said.

"This is precisely why reasonable restraint of trade clauses exist: to prevent individuals from unfairly leveraging confidential knowledge, goodwill, or strategic relationships built in one role for the immediate benefit of another."

He stressed that "one principle endures: loyalty, integrity and fair dealing are, and must be, at the core of any functioning business environment".

THE CONSPIRACY

The two former employees were senior vice-president Celeste Choi Okmi, who headed Guy Carpenter's Korean desk, and former junior broker Dominic Lee Dong Yeol.

Ms Choi and Mr Lee both started working at Guy Carpenter in 2018 and resigned in 2021. Ms Choi was a close mentor and direct supervisor of Mr Lee on the Korean desk.

Mr Lee resigned on Aug 2, 2021 and his last day of work was Nov 3, 2021. He entered an employment contract with LK Insurance Services on Nov 15, 2021, and signed with LK Re on Mar 1, 2022.

Ms Choi resigned from Guy Carpenter on Nov 15, 2021 and served six months' notice until May 14, 2022. She entered an employment contract with LK Re on Nov 19, 2021 to be its chief broking officer from May 16, 2022.

LK Re was incorporated in Singapore in April 2021. On Jan 11, 2022, SFMI appointed LK Re as the reinsurer for its domestic warehouse risks in South Korea.

In the lawsuit, Guy Carpenter disputed that Ms Choi and Mr Lee only started working for its competitor on the dates of their employment contracts, arguing that they had started earlier.

The company argued that all four defendants worked together to establish a facility to take on SFMI's domestic warehouse risks and persuade SFMI to place these risks with them.

The defendants denied these claims, countering that SFMI's decision to engage LK Re was based on its own commercial considerations, and not the result of their influence.

Ms Choi and Mr Lee also contended that it was by happenstance that they both started working with LK Re.

While Judicial Commissioner Faizal dismissed some of the claims made by Guy Carpenter, he ultimately agreed with the firm that the defendants had conspired to harm its business interests.

"Admittedly, each small piece of evidence itself may not be telling. However, when one puts each small piece of evidence in place, the composite picture that emerges is an obvious one," he said.

THE EVIDENCE

First, there was a virtual meeting on Jan 29, 2021 involving Ms Choi and three senior representatives from LK Insurance Services who were part of a taskforce to set up LK Re.

Second, on Dec 30, 2021, Mr Lee sent to Ms Choi's personal email account an Excel file attachment with the latest details on setting up the new facility for SFMI's domestic warehouse risks.

Guy Carpenter only found this email on its servers because it was forwarded by Ms Choi to her husband, and from her husband to her work email account.

Third, Ms Choi did not tell Guy Carpenter's managing director and her colleagues when she received the Jan 11, 2022 email informing her that another broker was taking over SFMI's domestic policies.

She claimed this was because reporting it would have made little difference and was not the usual practice. The judge disagreed as the "sheer value" of SFMI's premiums set it apart from general practice.

If Ms Choi were "genuinely invested" in looking out for her employer's interests, she would have raised the alarm because it meant that her desk would be losing an especially significant client.

Instead, "her outwardly resigned response, in my view, hints towards her already having knowledge of the background circumstances", he said.

Fourth, she helped Mr Lee draft an appeal to the Ministry of Manpower for an employment pass around February 2022.

The judge found she did this in her capacity as Mr Lee's prospective superior at LK Re, even though she was still serving her notice at Guy Carpenter at the time.

Three pieces of evidence also suggested that Mr Lee's employment on paper by LK Insurance Services was to mask the fact he was actually working for LK Re then.

This included his email signature and a letter to SFMI in early 2022 where he introduced himself as a representative of LK Re, and a graduate school reference letter Ms Choi wrote for him in December 2021.

She had written: "I asked (him) to work on the initial preparations and agenda planning for the foundation of (LK Re) until he leaves the country for his master's studies, which have been going very smoothly thanks to his input."

Judicial Commissioner Faizal found that Ms Choi and Mr Lee had breached their duties of good faith and employment contracts by assisting in the setting up of LK Re while still employed by Guy Carpenter.

They also breached post-employment non-solicitation and non-dealing covenants by dealing directly with SFMI within a year of ending their employment with Guy Carpenter.

Ms Choi was further found liable for breaching her duty of confidence to Guy Carpenter by sending confidential information to her personal email account, resulting in wrongful losses.

This included insurance policy documents as well as insured property values, historical loss data and survey reports. The judge agreed these allowed a competitor to get a sensing of Guy Carpenter's terms and undercut their prices.