As everyone in the insurance market will know, sensitive business information must remain confidential, and forms part of any successful insurance business. This is what makes the wheels of EC3 keep turning and is invaluable to its success.


In a recent decision by the Lloyd’s Enforcement Board (‘Lloyds’) an underwriter was fined and censured for breaching his duties of confidentiality. This finding reinforces general obligations at law and under contract, and should not be forgotten.

Nicholas Conway

Mr Conway, an underwriter at Marketform, accepted a charge of detrimental conduct. Mr Conway provided confidential and sensitive business information of Marketform to a competitor in Renaissance Re, whilst he was being recruited for a new role. He was ordered to pay a discounted fine of £35,000, was censured by Lloyds and ordered to pay £9,500 in costs.

Duties of confidentiality

In addition to Lloyd’s intervening, service agreements/contracts of employment and employee handbooks are likely to contain confidentiality provisions preventing disclosure of confidential business information to a third party. This is likely to be for the duration of employment and post termination of employment also.

If there is no express confidentiality wording, employees also have implied duties of confidentiality to their employer. An employer should not rely on this implied duty and should ensure that they have something written down in black and white!

Taking action

If an employer suspects any misuse of confidential information, they can take steps to try and protect it. They can put the former employee on notice and seek undertakings confirming that the former employee will comply with any express or implied obligations of confidentiality. If this does not work, the employer can issue proceedings, seek an injunction and/or issue a claim for damages.

Employers have to act fast in these situations. The process is normally very costly both for the employer and the former employee. Courts will prevent a former employee from using confidential information improperly and in a manner which is detrimental to the employer.

Conclusion

Brokers and underwriters must not, in order to secure employment, disclose details of specific business that they intend to undertake in the future, or their client lists. They could end up like Mr Conway and be named and shamed publicly by Lloyd’s, and with a big fine.

Be careful what you say and to whom, especially around Christmas time! It’s a dangerous time of year.

To read the Lloyd’s bulletin please see this link.

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