Moving insurance teams - the basic considerations and action plan

30 April 2020

This article was first published on the EC3 Legal website prior to its merger with Birketts on 30 April 2020.

Spring is the traditional time when broking and underwriting teams seek to move. The major renewal season is over, and bonuses for the previous year paid. Over the years, the London insurance broking market has witnessed the movement of many broking teams at this time.

Some of these have been highly contentious, but if carefully planned and handled, many of these problems do not arise. Indeed, once the existing employer receives the resignation notices from the team members and reviews matters in the cold light, it may consider the team move as a catalyst for rationalisation, and to seek a business sale to the proposed employer for good consideration. Better a price today with income coming in, than a costly fight (in management time and fees) where the current clients move with the team anyway. The sale of a business as a going concern is outside the scope of this article, but we can advise you separately upon this.

A team has said they are leaving – now what?

It needs to be recognised early on by all parties that once a job offer has been accepted by the team, and notice tendered to the existing employer, that the relationship is often irreversibly damaged whatever, and that as a consequence, all need to work together to ensure that the clients do not simply walk away from all parties, taking their business with them.

The problem for all is recognising that it is the strength of the personal relationship of the team with the relevant client that will often count most, and the team’s ability to deal with their business within an appropriate home. If this relationship is not strong, then the existing employer may have the chance of retaining the business- but if the team have dealt with that account for many years without interference, then the chances are that the bond between team and clients cannot be upset, and this should be recognised early as such.

How to balance the various “bargaining chips” is the issue that must be dealt with by the existing employer, the team and the proposed employer.

Much depends on the individual circumstances arising, but the following note contains is a non- exhaustive list of some of the matters with which to be concerned.

It should be noted that many of the following considerations are conditioned by the nature of the account involved, since the nature of the account will often dictate as to where that relevant account may move in order to be serviced properly from the client’s point of view (the team need to be certain that the client must be comfortable with the choice). Similarly, the age and expectations of the team will count for much, and as said above, the individual nature of and relationship to the clients will be highly material.

Timing is also a paramount, particularly issues regarding the date of the end of any gardening leave and notice periods, and in relation to the main renewal season in respect of the account. For instance, the existing employer will not want to place a team on gardening leave if the main renewal for their account is a month away. However, a team will want to ensure that a main renewal does not occur whilst they are way on gardening leave or during their notice period- they will want to control this as they can.

This memorandum is focussed on brokers more than underwriters, and a Team rather than an individual, although many of the considerations will be the same.

  • The existing employer considerations
  • The team’s considerations
  • Proposed employer considerations

The existing employer considerations

They do not wish to lose the team

They will need to examine the existing service contracts, to look at notice periods, the gardening leave provisions, and restrictions relating to confidentiality and non-solicitation. They will need to consider whether it is worthwhile trying to retain the team (or even some of them- perhaps divide and rule!) by offering further remuneration or incentives, or whether to place other employees into dealing with the account in order to endeavour to retain them.

Should any financial disadvantages be drawn to the team’s attention to entice them to stay (such as the early leaver provisions in final salary schemes, loss of share option or share rights, loss of bonuses) as a disincentive (a well-prepared team should not have these surprises!)? Should new incentives be offered? Either way, the employer will need to determine why it is that the team want to move see if they can address these, and perhaps draw the lessons from this elsewhere.

Professional Indemnity

Consideration should also be given to notifying professional indemnity insurers as a protective measure, since it may be assumed that the team will not be actively involved, or be as “concerned” as previously, with the conduct of the account after notice has been given, (although admittedly, if the Team wish to retain their clients, they are likely to do so in any case). A price that the existing employer may seek in order to allow an early termination, is that the team co-operate fully with all PI claims that come relating to the account (perhaps even as far as requiring them to make Court appearances as witnesses).


The run-off of the account and collection of premiums and claims moneys is more problematic, and the team members may be the only ones who are aware of the transactions forming the account. There will need to be some mechanism with regard to how this run-off is to be conducted in the future. How easy will this be? Would it be easier to pass this over to a proposed employer as part of the price for letting it all go through? If this is an account that costs huge amounts of cost and resource to maintain, is it better to cut the losses and run? Would there be consequent redundancy costs allied to the team’s business that could be passed to the proposed employer?

Restrictive covenants

Should written confirmation from the team, or if necessary injunctions, be sought to prevent the team breaching any restrictions as to confidentiality or non-solicitation? What evidence is there that they have been acting in breach of such covenants? Does the existing employer have the right to review all e-mails and personal calls that team members may have made in order to see if a breach has occurred already - it should not be automatically be assumed that this is the case. However, with data mining techniques, nothing on the computer is irretrievable!


All records and other confidential information of the existing employer should be returned immediately (including computer records) especially those maintained on home computers.

Lloyd's of London

Should Lloyd's passes be withdrawn

Gardening leave

Can the employees be placed on gardening leave, and what effect will this have? A review of the existing employment contract should be made- gardening leave should not be automatically implied into the contract, and it could be a breach to place them automatically on gardening leave. However, who will take over from the team in dealing with the account and the clients? Will they be able to deal effectively with the account without the team, or is it more likely to lead to a professional indemnity claim? Will the client move in any case with those employees that have been involved, perhaps for years? Gardening leave and the period under valid restrictive covenants should be considered together. No more than 15 months is recommended as ever being reasonable in total (one annual renewal plus a tidying up period) - 12 months may be better. The question for the existing employer is how he gets the greatest benefit from applying these two rights. Does it need the team for a renewal? Are they a wasted cost on gardening leave? Are they too disruptive in the office? What PI problems may they cause? It all depends on the circumstances – there is no blanket answer. Immediate gardening leave is often not the answer, but this knee-jerk reaction is common.

Social media

Has the employee being inviting clients or contacts to connect with him/her on LinkedIn? Do clients follow this employee on Twitter? Have they connected up on Facebook? What should you do about this when a team resigns?

If you do not have any guidance or contractual provisions in place in respect of social media, perhaps consider imposing a ban on updating a LinkedIn, Facebook or Twitter account during the period of garden leave.

It may be sensible to put together some guidance on how to deal with social media and contacts made during the course of employment. You could also tailor restrictive covenants to deal specifically with social media. Moreover, the contract of employment could be amended to state that on termination an employee will delete or disclose to the employer all professional contacts made during the course of employment.

Litigation threats

Can the threat of litigation against the employees be used as a bargaining chip to affect a sale of the whole of the business (including the run-off) to the proposed employer at a price?

The team's considerations

An employee is subject to the terms and conditions of his existing service contract, and he must be very careful to ensure that any valid restrictions are observed in full. Whilst the contract continues, he must continue to act in the best interests of his existing employer.

Bonuses, share and share option rights, pension rights

Are any of these likely to be lost or detrimentally affected? Are there any “bad leaver” provisions in the Articles of Association forcing sales of shareholdings at a reduced price? Will share options be lost? Are there any early termination provisions in the relevant pension scheme leading to reduced benefits? If there are, then this may push the team towards ensuring a sale of the business to the proposed employer where it is agreed that these provisions do not bite.

Division of the team

Often teams worry about being split- as a general comment, if the team split, they are less attractive to prospective employers. However, a standard tactic of former employers is to offer certain members of the team huge bonuses to stay in order to retain the account.

There is no golden rule here, but the team member must address his own reasons as to why he wanted to leave in the first place. It should also be noted that once he has given his resignation, and although this can be retracted later by agreement, the bond of trust and good faith is likely to be damaged, and the career path of the “retained” employee is likely to be blotted. Further, if he/she agrees to stay, and the account moves in any case, he will be redundant, and is unlikely to be able to join the team later. He must also be wary that the bonus he is offered to stay doesn’t relate to the account- he may not even get the bonus if the account moves!

Gardening leave

Is there an express contractual right to this in favour of the existing employer? What will the effect of this be on the conduct of the account and the relationship with the clients (or lack of! but are members of the team truly indispensable?).

Confidentiality and Restrictive Covenants

The validity of these provisions needs considering in the circumstances prevailing. If they are enforceable, what effect will that have upon the client base, especially if there is any period of gardening leave beforehand (see note above regarding the maximum aggregate period of these). In practical terms, the team members should be concerned not to contact clients in breach of any valid restrictions. They should be careful about discussing any confidential information with any third parties since this may be confidential to the existing employer. The courts are more willing to enforce confidentiality than non - solicitation covenants.


At what stage do the team decide to give notice to the existing employer? Are the team members’ notice periods of differing length, and how will the transition of the whole team be sold to the proposed employer? It is recommended that notice should not be given to the existing employer until written offers of new employment have been signed and delivered. Full disclosure of any continuing obligations, such as confidentiality and restrictive covenants, should be disclosed to the proposed employer, such that the proposed employer is fully aware of all the hurdles to be faced.

What if the move to proposed employer does not work?

Sometimes moves do not work, and it is worth considering a carve-out for the team which allows the team to leave, say, within one year. The team will wish to make sure that there are no restrictive covenants that will bite upon them in such circumstances in relation to the clients that they have brought in.

Tax issues

“Flowering Share” rights, “Limpet Company” Operations, and other methods have been used over the years. Perhaps also Limited Liability Partnerships may be used in the future. Careful tax planning should be undertaken of the method by which the team is brought in, especially in the light of the new tax regime introduced at the beginning of 2003. The aim is to bring the team’s efforts legitimately within the beneficial capital gains regime.


Is there a TUPE (Transfer of Undertakings (Protection of Employment) Regulations) Transfer? The team will wish to know if their employments automatically pass under TUPE as a result of the transfer i.e. in basic terms, has there been, or will be, a transfer of the business/undertaking carried on by the Team as a going concern? If the answer is “yes”, then TUPE will apply.

Proposed employer considerations

The Team are properly incentivised

It may be possible to offer incentives that give the team a tax beneficial incentive - the scope for offering these is reduced after the commencement of employment. However, great care must be taken of the new tax regime introduced by the Finance Act 2003 (see other structures above).

Notice periods to the existing employer are observed

There is often the concern that the proposed employer should not see the existing contracts of employment of the team members. However, if it sees the notice provisions, restrictive covenants and confidentiality provisions at least, then the existing employer is unlikely to make an issue of this. This is simply because it would be difficult for the existing employer to assert that the proposed employer had induced a breach of contract, if it did not know what those provisions were. Our view is that it is best to see what provisions apply to the team in order to know what the team can and cannot deliver. This will help assess the true value of the team and its business.

Any restrictive covenants and confidentiality provisions binding upon the employee are not breached

The proposed employer will not wish to be seen to be inducing the team member’s existing breach of contract and receive a claim in tort from the existing employer.

There is a transition of goodwill

The proposed employer will be most concerned to ensure that the transition of the account moves as smoothly as possible so as to ensure that the goodwill and value of the team is secured to its best advantage. This will include ensuring records of account are passed across from the existing employer with the clients’ instructions. He will wish to ensure that a proper run-off is undertaken of the business of the team’s clients (which is likely to require negotiation with the existing employer and will need the client’s express instructions to do so).

It has answers to all the concerns about the business that it is buying

Why are the team moving? What do they hope to achieve from the move? Are the team running away from problems, and if so what are these - e.g. personality clashes, management style issues? How truly portable are the clients, and what assurance would the clients give (but bear in mind that there may be a restrictive covenant in place which prevents the team approaching or soliciting business from the clients and it may not be possible to make enquiry)? What is the team’s business plan - this should not reveal previous brokerage and premium figures of the account at the existing employer, since this could be bound under a confidentiality provision.

It knows whether TUPE applies

It is important to know what inherited liabilities follow the team - if there is no transfer as a going concern under TUPE, then the employment obligations to the team do not transfer. However, if TUPE applies, the proposed employer effectively stands in the shoes of the existing employer, inheriting many of the liabilities of that employer to the team.

There are no tax issues

For example on limpet company / flowering share structures, or on/golden hellos/golden handcuff payments, or share options.

It can accommodate any transfer of pension entitlements

This assumes a transfer of pension rights for the team.

It has all necessary assurances

The proposed employer may also seek assurances from the employees that:

  • they have no regulatory or disciplinary procedures against them, and there are no circumstances which may lead to such proceedings;
  • there are no notified professional indemnity claims against them, and no circumstances likely to give rise to such proceedings-if so, are the team members required, or likely to be required, to help in dealing with these claims (in long litigation cases, the relevant employee could be involved for months in litigation which is likely to detract from their ability to perform). If there are PI issues with the team, it could raise the next PI renewal premium for the proposed employer, or give rise to exclusions.

The moving of teams often leads to very expensive litigation, which benefits no one. In our view, due to the complexity of many of the issues, it is often better on a “without prejudice” basis to negotiate a form of business transfer prior to the threat of any litigation. Consideration of many of the above can reduce the chance of this happening.

This article is for information only. For further information regarding moving insurance teams, please contact a member of our Insurance Team.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at April 2020.