Atrium Underwriting fined for misconduct of employees
18 March 2022
The insurance market, Lloyd’s of London (‘Lloyd’s’), has fined a member firm £1 million for effectively sanctioning and tolerating bullying and misconduct relating to an annual “boys night out”.
This is the largest ever fine imposed by Lloyd’s independent disciplinary committee (the Lloyds Enforcement Board) and its first for non-financial misconduct. Atrium has also agreed to pay Lloyd’s costs in the sum of £562,713.50.
In Market Bulletin Y5252, Lloyd’s set out its policy in relation to conduct involving harassment, bullying, discrimination, alcohol and drugs. In this bulletin, Lloyd’s had made it clear that the actions of individuals were important, but “of equal importance is the culture of the firm for whom the individual works and whether it supports or tolerates a culture of unacceptable personal behaviour towards others”.
Three charges were brought against Atrium. The first was that Atrium had failed to be “open honest and transparent” with Lloyds in relation to the misconduct of a particular employee (“Employee A”) involving a systemic campaign of bullying against a junior employee over a number of years. The second charge was that Atrium had failed to properly investigate and take disciplinary action against Employee A or acknowledge and challenge Employee A’s discriminatory and bullying behaviour – instead it negotiated an exit package with Employee A. The third charge was that Atrium engaged in conduct detrimental to Principal 6 and 10 of the Lloyd’s Principals and its Enforcement Bylaw by sanctioning and tolerating over a number of years an annual “Boys Night Out” during which some male members of staff, including two senior executives engaged in heavy drinking, initiation games and making inappropriate and sexualised comments about female colleagues which were both discriminatory and harassing to female members of staff.
Judgement of Lloyd’s Enforcement Board
In proceedings before the Lloyd’s Enforcement Board (‘the Board’), Atrium accepted the allegations of misconduct, and entered into settlement terms with Lloyds, which were subsequently approved by the Board. The terms that were agreed were: 1) public censure; 2) a fine of £1,050,000; and 3) the payment of Lloyd’s costs in the sum of £562,713.50. The Board accepted a 30% discount on what the fine would have been, on the basis that Atrium settled the proceedings at the earliest opportunity. Without the discount, the fine would have been £1.5 million.
The fine issued by Lloyd’s was the largest fine ever imposed by the Board, which reflects both how unacceptable such circumstances are and the seriousness with which Lloyd’s has treated the issue. Lloyd’s said it was important to note that Atrium has since updated its policies and procedures relating to disciplinary issues, whistleblowing and diversity and inclusion as well as provided guidance and training for senior managers. It has also implemented changes focused on culture and diversity and inclusion, including staff engagement surveys, a flexible working charter and mandatory training for managers on inclusive recruitment and being an active bystander. Atrium has also enhanced its governance by introducing a Board level Culture Committee and implementing a values framework to ensure employees understand the behaviours expected of them.
This case report, while on the face of it is principally of interest to those that access the Lloyd’s of London market place, it is potentially relevant to all organisations who are regulated or supervised by an external body, because it shows an increasing willingness for those bodies to sanction the companies they supervise for matters going beyond strict issues of professional competence. In the past, regulators have typically left matters such as bullying and harassment for employer’s to address, but we are increasingly seeking them sanction and fine companies for wider issues such as bullying and discrimination in the workplace.
How can Birketts help?
Birketts can help ensure you have proper procedures in place and ensure all of your staff are trained on matters of Equality and Diversity. Our services include:
- Reviewing and updating your disciplinary, grievance and whistleblowing policies.
- Preparing flexible working policies.
- Updating Equality and Diversity policies.
- Providing training on recruitment (avoiding common pitfalls and unconscious bias).
- Delivering comprehensive Equality and Diversity training for all staff.
Please do contact Birketts to discuss how we can assist you.
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 March 2022.