Insurance Giant Wins Case Against Ex-Employees for Client Theft

In a significant legal ruling, American reinsurance firm Guy Carpenter has successfully sued two former employees for luring a major client away to a competing company they helped establish in Singapore. The case centers around the diversion of Samsung Fire and Marine Insurance (SFMI), which resulted in an estimated loss of at least US$1.3 million in brokerage revenue for Guy Carpenter.

On December 3, 2023, the Singapore High Court found that former senior vice-president Celeste Choi Okmi and junior broker Dominic Lee Dong Yeol, along with LK Insurance Services and its local subsidiary LK Re, conspired against Guy Carpenter by using unlawful means to divert business. The court will assess the damages and legal costs separately.

Judicial Commissioner Mohamed Faizal acknowledged the defendants’ argument that clients have the freedom to choose where to place their business. However, he emphasized that this perspective overlooks the essential duty of employees to act in good faith towards their current employers. He stated, “For the system to function coherently… it is essential that employees are duty-bound to act in good faith to advance the interests of their current employers.”

The Background of the Case

The case arises from the actions of Choi and Lee, who both joined Guy Carpenter in 2018 and resigned in 2021. Choi, who headed the Korean desk, mentored Lee during his tenure. Lee resigned on August 2, 2021, with his last working day on November 3, 2021. He signed an employment contract with LK Insurance Services on November 15, 2021, and subsequently joined LK Re on March 1, 2022. Choi resigned on the same day as Lee and began her contract as chief broking officer at LK Re on May 16, 2022.

LK Re was incorporated in Singapore in April 2021, and on January 11, 2022, SFMI appointed LK Re as the reinsurer for its domestic warehouse risks in South Korea. Guy Carpenter contended that Choi and Lee had started working for their competitor prior to their official employment dates, claiming they established a facility to handle SFMI’s domestic risks.

The defendants maintained that SFMI’s decision to engage LK Re stemmed from its own business considerations, denying any undue influence from their actions. They argued that their simultaneous employment with LK Re was merely coincidental.

The Court’s Findings

Judicial Commissioner Faizal evaluated the evidence presented by both parties and ultimately sided with Guy Carpenter, concluding that the defendants had conspired to undermine the firm’s business interests. He noted that while individual pieces of evidence might seem inconclusive, together they painted a clear picture of wrongdoing.

Key evidence included a virtual meeting on January 29, 2021, involving Choi and LK Insurance Services representatives, and an email Lee sent to Choi’s personal account containing sensitive information about setting up the new facility for SFMI. This email was discovered only after it was forwarded by Choi to her husband and then to her work email.

Choi’s failure to inform her colleagues at Guy Carpenter of SFMI’s decision to switch brokers further suggested a lack of commitment to her employer’s interests. Faizal remarked that if Choi were genuinely invested in her employer, she would have raised concerns about the significant client loss.

Additionally, evidence showed that Choi assisted Lee with an appeal to the Ministry of Manpower for his employment pass while still serving her notice at Guy Carpenter. The judge found this to be a violation of her duties, indicating that she acted as Lee’s prospective superior at LK Re during her notice period.

The judge also highlighted that Lee’s employment at LK Insurance Services appeared to be a facade for his actual work with LK Re, referencing discrepancies in his email signature and a letter Choi wrote for him, which detailed his contributions to the establishment of LK Re.

Judicial Commissioner Faizal concluded that both Choi and Lee had breached their employment contracts and covenants, including non-solicitation and non-dealing clauses, by engaging with SFMI within a year of leaving Guy Carpenter. He also found Choi liable for breaching her duty of confidence by sending confidential information to her personal email, which ultimately enabled a competitor to gain insight into Guy Carpenter’s business operations.

This ruling underscores the importance of loyalty and integrity in the business environment, reiterating that employees must prioritize their current employer’s interests over future opportunities. The case serves as a critical reminder of the legal and ethical responsibilities inherent in professional relationships.