State Courts

In Turkish insurance policies, the usual dispute resolution mechanism provided for resolution of coverage disputes is litigation before state courts. As a rule, insurance disputes are resolved before commercial courts. However, insurance disputes regarding maritime law are resolved before specialized courts of maritime and insurances disputes where the insured is a consumer are resolved before consumer courts. If a province does not have any commercial court or a specialised court (such as maritime or consumer courts), then the disputes will need to be held before general competent courts which are civil courts.

If, in the policy, litigation before state courts is opted, as per article 5/A of the Turkish Commercial Code No. 6102 (“TCC”), without being subject to any monetary limits, the parties are required to exhaust the mandatory mediation as a prerequisite before filing a case before the state courts.

Consumer Arbitration Committee

As for the consumer disputes, as of 2024, the disputes below TRY 104,000 (EUR 2,965) are required to be resolved before Consumer Arbitration Committee and the disputes above TRY 104.000 (EUR 2,965) are subject to mandatory mediation.

Insurance Arbitration Commission

Claims against insurers can also be brought before the Insurance Arbitration Commission (“Commission”), which is a body under the Insurance Union of Türkiye, as an alternative to state courts or Consumer Arbitration Committee. As long as the insurer is a member of the Commission, an arbitration agreement between the parties is not required to apply to the Commission. This is a special dispute resolution process different than the ordinary arbitration proceedings. The arbitrators are appointed by the Commission, not by the parties.

If the dispute was already subject to court, arbitration or enforcement proceedings, application is rejected.

International or Domestic Arbitration

Although it is less usual then the previous mechanisms, parties can also agree domestic or international arbitration under insurance agreements.

In Turkish insurance law, there are no specific protocols governing pre-action conduct for insurance disputes. However, TCC sets forth some actions that need to be followed after the occurrence of the insured risk and before leading to a possible dispute. These actions are related to the policyholders’/insured’s obligation to notify the insurer, to give necessary information/documents to the insurer and to reduce and prevent further damages.

Risk Occurrence Notification

According to article 1446 of the TCC, once the policyholder learns that the insured risk has occurred, the policyholder should notify the insurer without delay. In liability insurances, as per article 1475 of the TCC, this notification should be made within 10 (ten) days.

Article 1446 of the TCC sets forth that if failure to comply with this notification obligation leads to an increase in the compensation or insurance payment, then a reduction will be made on the compensation amount to be paid taking the degree of fault into consideration.

Although the procedure for this notification is not clearly specified under the TCC, considering that, under the TCC, notices between the merchants regarding default, termination or cancellation are required to be made via notary public, registered mail return receipt requested, telegram or via an electronic mail system with an e-signature, this rule should also be considered for insurance notifications.

Demanding Information/Documents

According to article 1447 of the TCC, as agreed under the insurance agreement or upon the insurer’s request, the policyholder is obliged to provide the insurer with all kinds of information and documents that are necessary to determine the scope of the risk or compensation and that the policyholder must deliver, within a reasonable period of time. Moreover, the policyholder is under the obligation to allow the insurer to inspect the place where the risk occurred or the other relevant places. In case of a failure of this obligation, a reduction will be made on the compensation amount to be paid taking the degree of fault into consideration.

Measures to Mitigate/Prevent Further Loss

According to article 1448 of the TCC, the policyholder has to take the necessary measures to the extent possible to prevent damage, reduce damage or prevent damage from increasing or protecting the insurer’s recourse rights to third parties. Failure to comply with this obligation may lead to a reduction in the compensation, taking the degree of fault of the policyholder into consideration.

Although some chambers of the Court of Cassation are appointed for insurance disputes, these chambers handle a wide range of other types of disputes with no exclusive specialty in the insurance law. Lack of specialized courts in the field of insurance causes the judicial process to take a long time. Finalization of the insurance litigation in Turkish courts can take 3-4 years on average and the length of the proceedings can be even more as the complexity of the grounds and the cases increase.

In order to overcome these challenges, the legislator has taken the functioning of the “Ombudsman System” in international practices as the basis for the arbitration system under the article 30 of the Insurance Law. Accordingly, Insurance Arbitration Commission was introduced as an ombudsman-like system. Insurance Arbitration Commission specializes in insurance disputes and provides faster solutions, and therefore, resolve the insurance disputes more efficiently when compared to courts.

As the commercial disputes, insurance disputes are subject to a mandatory mediation as a case condition without any monetary limits. In case the dispute is a consumer dispute, then the disputes below TRY 104,000 (EUR 2,965) are required to be resolved before Consumer Arbitration Committee and the disputes above TRY 104.000 (EUR 2,965) are subject to mandatory mediation.

If the dispute is not resolved through mandatory mediation, then according to article 17 of the Mediation in Civil Disputes numbered 6325, the mediation stage will end with a final record of disagreement and then the applying party will be able to bring the dispute before the state courts.

Moreover, as an alternative to state courts and Consumer Arbitration Committee, the parties can prefer to resolve the insurance dispute before the Insurance Arbitration Commission. If the policyholder choses this dispute resolution method, the insurers that are members to the insurance arbitration system cannot oppose to this dispute resolution method, as insurers opting to be a member of this system give a prior consent to arbitration for future arbitration disputes, as per article 30 of the Insurance Law.

Under the Turkish civil procedure law, successful policyholders are entitled to recover costs of insurance disputes from insurers.

The scope of the litigation costs is specified under article 323 of the Turkish Code of Civil Procedure (“Turkish Code of Civil Procedure”) numbered 6100 and includes court fees for application, decision and judgment; postal expenses; file and other document expenses; expenses related to the issuance of protests, notices, warnings and power of attorney and provisional remedies; judicial inspection expenses; fees and expenses paid to witnesses and experts; fees, taxes, charges and other expenses paid for documents obtained from official institutions; attorney fee and other expenses incurred during the proceedings. The expenses incurred during the mandatory mediation process are also included in the litigation costs.

The most notable expenses listed above are the expert expenses, which could mount up parallel to the complexity of the case, especially as the parties might object to expert reports and numerous expert reports might be taken during the litigation process, and the attorney fees up to the amount determined by the Official Tariff of the Turkish Bar Association.

According to article 326 of the Turkish Code of Civil Procedure, the costs of the proceedings are the burden of the party against whom the judgment is rendered. If both parties are partially justified in the case, the court shall apportion the costs of the proceedings according to the proportion of justification of the parties.

The court will award the costs of the proceedings without the need for the policyholder to request it, and the costs of the proceedings cannot be the subject of a separate lawsuit. Contractual attorney fees are not recoverable under Turkish law.

State Court Decisions

The Turkish judicial system foresees a two-step mechanism for the ordinary judicial review of court decisions. After a decision is rendered by the courts of first instance, the decision can be appealed depending on the disputed amount before the Regional Appellate Court and the decision of the Regional Appellate Court can be appealed depending on a higher disputed amount before the Court of Cassation.

According to articles 341 and 362 of the Turkish Code of Civil Procedure and for 2024, the minimum disputed amount for appeals before the Regional Appellate Court is TRY 28,250 (EUR 805) and the minimum disputed amount for appeal before the Court of Cassation is TRY 378,290 (EUR 10,784).

Insurance Arbitration Commission Awards

Depending on the disputed amount, the decisions given by the Commission can be final or subject to objection before the Commission or appeal before the Court of Cassation. According to the monetary thresholds announced as of February 28, 2023, the disputes concerning less than are final; however, if the dispute is equal to TRY 15,000 (EUR 428) or exceeds this amount than it will be subject to objection before the Commission. For the applications made to the Commission concerning the disputes more than TRY 238.730 (EUR 6,805), the decisions of the Commission can be appealed before the Court of Cassation. An update on these thresholds is expected to be made for 2024.

Other Arbitral Awards

Set-aside actions are the only remedy against both domestic and international arbitral awards. Courts can set aside an arbitral award only on the grounds foreseen numerous clauses in the law, such as violation of the principle of equality of the parties and the right to be heard, and violation of public order and the merits of the arbitral award cannot be reviewed.

It is the policyholder’s obligation to disclose important facts that the policyholder knows or should be known to the policyholder. Undisclosed facts are deemed important when they have the potential to prevent the policy from being signed or being signed under stricter conditions.

According to article 1435 of the TCC, unless demonstrated differently, questions asked by the insurer, whether verbally or in writing, are deemed as important. In addition, according to article 1436 of the TCC, if the policyholder has a reasonable expectation that the insurer will consider certain information to be important, then the policyholder must also disclose this information to the insurer.

According to article 1439 of the TCC, if the insurer discovers that the duty of disclosure was not complied with prior to the policy’s inception, the insurer has 15 (fifteen) days to terminate the policy or request premium increase. The insurance will be automatically terminated in case the request for premium increase is not accepted by the policyholder within 10 (ten) days.

According to article 1444 of the TCC, if the policyholder takes actions that increase the probability of the occurrence of the risk or aggravate the existing circumstances, or if any of the matters that were expressly accepted as aggravation of the risk when the policy was executed, the policyholder is under the obligation to immediately notify the insurer. If these take place without the knowledge of the policyholder, the policyholder shall notify the insurer within 10 (ten) days at the latest from the date of learning.

According to article 1445 of the TCC, if the insurer becomes aware of the possibility of the occurrence of the risk or aggravation of the existing circumstances, the insurer has the authority to terminate the policy or demand the premium difference within 1 (one) month of learning. If the policyholder does not accept to pay the premium difference within 10 (ten) days, then the policy is deemed terminated. In the event that the non-disclosure of the policyholder was wilful, the insurer may retain the insurance premium that was paid while terminating the policy.

According to the article 1439/2 and 1445/5 of the TCC, if the non-disclosure due to the policyholder’s negligence is found out after the occurrence, the insurance indemnity will be reduced based on the policyholder’s level of negligence, as long as the negligence has the potential to influence either the amount of the indemnity or the likelihood of the occurrence. In case of an intentional non-disclosure, if the risk materializes and there is a link between the wilful non-disclosure and the occurrence of the risk, the insurer is released from the liability for insurance indemnity. If there is no connection, the indemnity will be paid based on the percentage of the premium that was paid and the premium that would have been paid if the circumstances had been revealed.

According to the article 1445/7 of the TCC, if the risk is materialized before the insurer exercises the right to terminate the policy or before the termination right gets into effect, the insurance indemnity will be paid by taking the ratio between the premium that was already paid and the due premium which should have been paid, provided that there is a link between the occurrence of the risk and the modification.

According to the article 1446/2 of the TCC, the policyholder is under the obligation to notify the insurer without any delay once the risk has occurred. If the policyholder does not notify the materialization of the risk or notifies it with delay, the indemnity to be paid is to be reduced according to the degree of negligence, provided that the failure of notification increased insurance indemnity.

According to articles 1444 and 1446 of the TCC, the policyholder’s duty of disclosure continues during the term of the policy and after the occurrence of the risk as explained under the Q8.

During the policy term, the policyholder is required to notify the insurer of any aggravation in the circumstances, no later than 10 (ten) days after becoming aware of the new conditions.

After the risk has occurred, the policyholder has to notify the insurer of the occurrence of the risk without delay. Although there is no certain time limit for notifications to be made according to the TCC, the general terms for different insurance types that are issued by the Ministry of Treasury and Finance which the insurers have to use in their policies might have certain time limits, therefore the general terms should also be considered.

Along with the general principles governing the formation of the insurance agreements, article 1452 and 1486 of the TCC introduces three distinct sets of obligatory rules on the validity of insurance agreements.

Non-adherence to the initial set of rules results in the complete nullification of the entire insurance agreement. For example, the article 1404 of the TCC stipulates that no insurance shall be established to cover a loss stemming from acts of the policyholder that contravene the mandatory provisions of laws, moral principles, public policy and personal rights. Again, as per the article 1429 of the TCC, an insurance agreement that stipulates indemnification for a loss caused by the deliberate actions of the insured or policyholder becomes null and void. Moreover, as per the articles 1452 and 1420, the prescription periods specified under the TCC cannot be changed by the parties.

Failure to comply with the second set of rules leads to the voidance of the particular clause, to the extent that the agreement is applicable without the inclusion of said clause. For example, according to the article 1480 of the TCC, the insurer is prohibited from exchanging the insurance indemnity to be paid to the injured party, having the right to make a direct claim against the insurer, with the insurer’s receivables arising from the insurance agreement.

The third set of rules falls under the category of semi-mandatory, implying that these regulations cannot be altered by agreement if such amendments run counter to the interests of the insured or the policyholder. Where such amendments are made, the regulations outlined in the TCC will automatically precede. Examples of these semi-mandatory rules are related to the policyholder’s/insured’s duties of disclosure and notification and sanctions to be applied if these duties are not complied with.

In Turkish law, the principle of good faith covers all kinds of contractual relationships, however it has a greater importance in insurance law. Article 32 of the Insurance Law directly obliges the insurers to act in good faith especially while performing marketing activities, informing the policyholders, protecting the rights of the insured, and making the insurance payments in time.

The TCC, meanwhile, highlights the implied duties of policyholders and insureds to be fulfilled in good faith with regards to the insurer. For example, the TCC does not foresee a strict time limit as for the notification of occurrence of risk, however, it expects the policyholder/insured to act promptly without faulty delay.

Other examples where the principle of good faith stands out is (i) the insured / policyholder’s obligation to take all necessary precautions to prevent the occurrence of risk or to mitigate the loss as if the policyholder has no insurance coverage and (ii) the insured/policyholder’s duty to protect the subrogation rights of the insurer to be used against the third parties.

The Consumer Protection Law numbered 6502 does not provide any remarkable implied terms for the insurance agreements. The Regulation on the Activities to be Considered within the Scope of Insurance and Insurance Contracts Concluded at a Distance issued by the regulative body in 2021 provides for protective measures for the consumers. These measures, however, mostly concern the regulative issues such as conditions to be fulfilled by enterprises to be able to sell and/or market insurance products.

Although there are no specific implied terms related to consumer insurance contracts, two sets of implied terms arise covering consumer insurance contracts among others, first from the TCC and second, arguably, from the general conditions issued by the Ministry of Treasure and Finance for different insurance types.

The TCC provides mandatory provisions which cannot be agreed under the insurance agreement otherwise. According to the article 1452 and 1420, the prescription periods specified under the TCC cannot be changed by the parties.

The TCC also provides mandatory provisions which cannot be amended or opted out of against the interest of the insured/policyholder. For example, according to article 1427/5 of the TCC, any insurance agreement provisions stipulating that the insurer is free from default interest payment are deemed invalid.

Again, as per the General Conditions of Professional Liability Insurance, even if it is agreed under the insurance agreement that (i) the risks arising from the activities of the insured other than the insured’s professional activities will be subject to insurance indemnification, (ii) during the performance of the insured’s professional activity, all events and behaviours intentionally caused by the insured will be subject to insurance indemnity, and (iii) the events occurring as a result of the insured being under the influence of alcohol, drugs or narcotic substances while performing the professional activity subject to the policy will be subject to insurance indemnity; these provisions cannot be considered within the scope of the insurance coverage. Therefore, such provisions will not be applied.

On the other hand, the mandatory nature and overriding capacity of the insurance agreement’s general conditions are disputed. These conditions are not provided directly by the TCC nor the Insurance Law, instead the Ministry of Treasury and Finance issues the general conditions for different kinds of insurances based on the powers granted by the TCC and the article 1425 of the TCC which simply mentions that the insurance policies must include general conditions. The Constitutional Court¹ granted a decision and abrogated the references made to the general conditions on compulsory traffic liability insurance. The Constitutional Court determined that it is not fair to grant the administrative bodies with a discretional power that goes against freedom of contract and the rule of law. Although the decision was related to the compulsory insurance against civil liability in respect of motor vehicles, the Court’s conclusion has the power to affect other insurance products. This decision gives more importance to the special conditions determined by parties for the insurance agreement, if these special conditions are not against the mandatory provisions of the TCC and reduces to some extent the amount of implied terms by nullifying the mandatory nature of the general conditions.

Footnote(s):

¹ Constitutional Court, 2019/40 – 2020/40, dated 17.07.2020, published on 09.10.2020. https://www.resmigazete.gov.tr/eskiler/2020/10/20201009-17.pdf

The article 1484 of the TCC sets out the limits to the insurer’s defences against third party claimants for the mandatory insurances in general.

According to the first paragraph of this article, even if the insurer is fully or partially released from the obligation of performance towards the insured, the obligation of performance continues for the injured party up to the compulsory insurance amount. For instance, if the insured causes intentional damage to a third party, under normal circumstances, the insurer would not be under the obligation to compensate, however in the case of mandatory insurances, the insurer is under the obligation to compensate the third party.

According to the second paragraph of this article, the termination of the insurance relationship shall be effective against the injured party only 1 (one) month after the insurer notifies the competent authorities that the agreement has ended or will end. Which means if the risk subject to the insurance indemnity occurs within this 1 (one) month, the insurer cannot counter the injured party’s claim by stating that the insurance agreement was terminated before the occurrence of the risk.

The paragraph three on the other hand somewhat alleviates the limits provided in the previous paragraphs by stipulating that the insurers obligation to compensate ends to the extent that the injured party’s damage is covered by social security institutions.

As an example of the compulsory insurance, Highway Traffic Law numbered 2918 (“Highway Traffic Law”) renders the liability insurance mandatory for automobile operators and provides some limits on the insurer’s defensive rights. According to article 95 of the Highway Traffic Law, cases arising from the insurance agreement or the relevant law and resulting in the termination of the indemnity obligation or the reduction of the amount of compensation cannot be asserted against the injured party. The insurer, paying the insurance indemnity to the injured party, can reclaim this amount from the policyholder.

According to the article 1473 of the TCC, a liability insurance policy is occurrence-based meaning that as long as the risk occurs within the policy period, except for statute of limitations considerations, the time when the loss is occurred and the time when the third-party claim is asserted are not relevant to the assessment of the insurance coverage. However, this issue is regulated under the mentioned article in a non-prescriptive manner and the contrary can be agreed under the insurance agreement by the parties.

In the practice, the contracting parties can regulate the moment at which the insurance amount arises in the insurance policies. The parties may agree that the moment when the insurance amount will arise is (i) the moment when the risk occurs, (ii) the moment when the damage occurs or (iii) the moment when the third party submits a claim for compensation. These three arrangements may also be used together in different ways in an insurance agreement, so that, for example, both the incurred loss and the asserted third-party claim may be required to be realized within the insurance period.

It is important to note that, compulsory insurances are generally occurrence based.

Article 1404 of the TCC provides instances where losses cannot be insured. These are the losses arising from an action of the policyholder violating the imperative provisions of the law, public policy, and personal rights. Article 1429 of the TCC, on the other hand, excludes losses occurring from the wilful actions of the policyholder, insured and the persons that are responsible from the scope of insurance coverage.

Apart from the above, the losses typically excluded from insurance policies can be listed as those arising from driving under influence in the case of traffic insurance; disposals made on insured property by public authorities (in terms of immovable properties, expropriation is a common cause of loss); leaving the car unlocked in the case of car theft; the losses incurred during the driving of cars by unlicensed persons.

Since there is no mandatory or semi-mandatory provision on this matter in the TCC and the Insurance Law, the parties may regulate the conditions under which the causal link between the cause and the damage will be established in the insurance policies.

In cases where the parties do not stipulate the degree of causal link, this becomes a matter of debate since there is no regulation in the Turkish insurance legislation on the principles to be considered when establishing the causal link between the loss and the cause. Especially in practice, it is controversial whether the damages arising from different causes, both covered and non-covered, are covered by the insurance coverage or not, since the damage will be deemed to be covered according to the degree of connection to be taken into account and the insurer’s indemnity obligation will be in question.

When the decisions of the Turkish courts, which are related to the degree of connection to be taken as basis in insurance agreements in cases where it is not separately regulated by the parties, are examined, it is seen that the Court of Cassation refers to the principle of proximate causation or proximate cause in most of its decisions.

For example, in an earthquake, a building under compulsory earthquake insurance was heavily damaged and the property owners applied to the insurer DASK claiming that the damage was caused by the earthquake and DASK refused to pay compensation claiming that the building was heavily damaged due to structural defects of the building, not the earthquake. The Insurance Arbitration Commission, to which the dispute subsequently came before, received an expert report on whether the proximate cause was the earthquake or the structural defects of the building and made an assessment accordingly.

In another case that was brought before the Court of Cassation, a fire broke out during the opening of a container of furniture at customs and the insured furniture was damaged. In the decision of the Commercial Court of First Instance upheld by the Court of Cassation, it was stated that the proximate cause of the fire could not be the atmospheric pressure in the container containing the furniture, and that the proximate cause could be a physical fire that caused the fire during the opening of the container.

In another case before the Court of Cassation, an elderly individual with neurological problems, who was the insured of a personal accident insurance policy, fell down a flight of stairs and died. The forensic medical examiner found that although the individual had suffered a blow to the head, he died from a cerebral haemorrhage that was not caused by the fall (which would not be covered by the insurance as it was a condition not caused by the accident). The Court of Cassation sent the case back to the Appellate Arbitral Tribunal, which had not taken this into account, for the obtainment of an expert opinion on the cause of death and a decision based on proximate cause.

If the damage is incurred as a result of multiple causes, according to the principle of proximate cause, which is generally taken as a basis in the decisions of the Court of Cassation as explained under Q16, the insurer may be held liable based on the cause that is closest to the occurrence of the damage and based on whether this risk is covered or not.

If one of the causes of the occurrence of the risk is covered by the policy and the other is not, the general approach is that the insurer is liable according to the proportion of the effect of the covered cause on the occurrence of the risk.

According to the article 1449 of the TCC, if the policyholder/insured breached the policy conditions of its own fault or did not comply with its obligations against the insurer, unless it is decided otherwise in special regulations, the insurer will have the right to terminate the insurance policy in part or in full, provided that this right is agreed under the insurance policy. The right of termination will lapse after 1 (one) month upon learning the breach.

According to the article 1449/1 of the TCC, if there is no fault of the policy holder/insured in the breach of the obligation arising from the insurance policy, the insurer has no right to terminate the insurance policy, unless it is decided otherwise in special regulations.

Also, according to the article 1449/3 of the TCC, if the breach does not affect the realization of the risk and the scope of the performance that the insurer must fulfill, then the insurer cannot terminate the insurance policy.

Although there is no specific rule stipulated for this scenario, it is generally accepted that one of the policyholder’s failures to comply with the policy terms affect the other policyholder’s rights under the policy.

However, especially in cases where the policyholders are under the obligation to fulfill their obligations separately from each other and one of the policyholders does not act in good faith, such as the obligation to pay premiums, the failure of one of them to fulfill its obligation will not have consequences for the other policyholders.

The obligation of the policyholder to comply with the provisions of the policy does not cease where insurers decline cover for claims. The obligations of the policyholder, the insured and the insurer arising from the insurance relationship will end only upon the termination of the insurance agreement.

The most important obligations that the policyholder must continue to comply with are the obligations to prevent and mitigate the loss regulated under article 1448 of the TCC and to protect the insurer’s recourse rights. Even if the insurer refused to pay, if a court decides that the loss is covered by the insurance, then the insurance indemnity may be decreased if the insured violated the obligations to mitigate and prevent the loss and to protect the insurer’s subrogation rights.

Insurance experts are consulted when calculating the insurance compensation in the event of the occurrence of a risk covered by the insurance policy. Pursuant to the Regulation on the Appointment of Insurance Experts, insurance experts may be appointed by the insurer, the insured, the policyholder or the persons who benefit from the insurance agreement. It is possible that the parties may not find the report to be prepared by the experts sufficient and accurate. In this case, whether the parties apply for judicial remedy before the local courts or the Insurance Arbitration Commission, an expert will be appointed by the authority before whom the dispute is brought, to calculate the insurance compensation and this expert or the expert panel will calculate the compensation.

While calculating the compensation amount, different aspects will be taken into account such as (i) contributory negligence, (ii) depreciation in classical property insurance, (iii) underinsurance, (iv) coinsurance, and (v) the deductible agreed in the policy.

Pursuant to article 1461/1 of the TCC, the indemnity liability of the insurer is limited to the value of the insured interest at the time of the occurrence of the risk. Even if the insurance value to be determined by the parties in the policy exceeds the insurance value at the time of occurrence of the risk, the insurance indemnity shall be limited to the insurance value in accordance with the prohibition of enrichment.

In addition, article 1461/2 of the TCC regulates new value insurances, which constitute an exception to the prohibition of enrichment and the above principles. This type of insurance corresponds to the property insurances with reinstatement clauses in Turkish insurance law.

In both classical property insurance and new value insurance, the pre-existing change of use plans of the parties are not effective in the calculation of the damage.

According to article 1472/1 of the TCC, the Turkish insurance law provides the insurers a right of legal subrogation without the need for further provisions in insurance agreements. This legal right of subrogation is conditional on the fulfilment of certain steps which are the existence of a valid insurance policy between the insurer and the injured party, the damage being within scope of the insurance policy, the injured party having the right to claim compensation from the third party in the first place and the payment of the insurance compensation by the insurer to the injured party. When these conditions are fulfilled, the insurer acquires the right of subrogation and can claim the paid amount from the third party responsible for the loss.

The rights of subrogation are limited by the amount of insurance compensation paid to the insured and if the damage was partially compensated by the insurer, the rest of the damage can be claimed by the insured from third parties.

If the required premium is paid by the policyholder, then claims can be made against the insurers. If the policyholder did not pay the insurance premiums partly or in whole, then as per the TCC, insurer can terminate the insurance policy.

According to article 1417 of the TCC, if the policyholder becomes insolvent or bankrupt before paying the insurance premium, the insurer can request collateral and if the policyholder does not provide a collateral within 1 (one) week upon the request, the insurer can terminate the insurance policy.

According to article 1434 of the TCC, the insurer can terminate the insurance policy directly within 3 (three) months (i) if the first instalment of the premium or (ii) if the insurance premium needs to be paid in full in one instalment is not paid in time.

If the policyholder does not pay any of the further premiums, the insurer can notify the non-payment to the policyholder and give 10 (ten) days to the policyholder for the payment of the next instalments and inform the policyholder that if the premium is not paid within this period the policy is automatically terminated.

The Constitutional Court ruled on 14 February 2023 that the calculation methods of damages within the context of compulsory financial liability as per the article 90 of the Law No. 2918 on Highway Traffic Law were unconstitutional. The annulment of provisions related to the calculation of the compensation for the loss in value, loss of support, and permanent disability. Whereas this calculation was based on the Turkish Code of Obligation in terms of the operator, the relevant provisions of the Highway Traffic Law was applicable when it comes to the insurer. As this causes a differentiation between the scope of the compensation obligation of the operator and the insurance company, the relevant provisions were cancelled. This will lead to an increase in compensation liability for insurance companies.

Amendments to the Regulation on Financial Reporting for Insurance and Reinsurance Companies and Pension Companies were published in the Official Gazette numbered 32189 on May 13, 2023, clarifying the scope of the regulation, and requiring companies to comply with “Turkish Financial Reporting Standards (TFRS) 17 Insurance Agreements” which determines the principles for recognition, measurement, presentation, and disclosure of insurance agreements in the financial statements. These provisions will enter into force as of January 1, 2025.

Amendments to the Regulation on Insurance Arbitration published in the Official Gazette numbered 32214 on June 7, 2023, introduced new arrangements regarding the working procedures of reporters, objection authorities, and insurance arbitrators’ experience. Electronic applications to the insurance arbitration system and the Appellate Arbitral Tribunal will be allowed. Moreover, the preliminary eligibility examination to be made by the reporters is extended, covering initiation of enforcement proceedings in addition to court, or arbitration proceedings and those before the Consumer Arbitration Committee.

The Communique on Financial Reporting for Insurance and Reinsurance Companies and Pension Companies was published in the Official Gazette numbered 32326 on October 1, 2023, and will come into force on January 1, 2025. This regulation outlines the format and content of consolidated and unconsolidated financial statements based on TFRS, and their disclosure to the public. The Communique abolished the Communique on Presentation of Financial Statements, which was published on April 18, 2008.

The Communique on Insurance Uniform Accounting Plan and Prospectus was also published on October 1, 2023 in the Official Gazette numbered 32326, and will come into force on January 1, 2025. This regulation aims to facilitate the preparation of financial statements in line with TFRS and ensure consistency in accounting records and reporting, enabling companies to fulfil their responsibilities and monitor their financial strength.

On January 18, 2024, the Regulation Amending the Regulation on Insurance and Reinsurance Brokers was published in the Official Gazette numbered 32433. Amendments introduced by this regulation include a significant increase in the minimum capital amounts of brokers. Accordingly, the base minimum capital amount was increased to TRY 2,500,000 (EUR 71,266) the extra minimum capital to be sought for each license was set at TRY 500,000 (EUR 14,253) and the extra minimum capital to be sought for a reinsurance license was set at TRY 1,000,000 (EUR 28,506).

Considering the increase in digital transformation in Türkiye, the fact that Türkiye has been identified as one of the nations where cyberattacks are growing the fastest and the official institutions continuous efforts to prevent cyberattacks and protect personal data, cyber security and personal data protection insurance are expected to be among the fastest growing areas in Turkish insurance law.

The coverage in cyber insurance is usually provided for risks associated with attacks on the IT infrastructure and networks of businesses. The insurance sector already offers new cyberattack policies under the identity protection insurance, digital protection insurance and personal or commercial cybersecurity insurance to cover losses resulting from attacks on digital platforms like computers, electronic devices or automated teller machines, even though legislative regulations have not yet taken effect.

In addition, especially during the Covid-19 pandemic, a rapid growth was observed in the telemedicine sector in the world and the health insurance sector was affected by this area. In Türkiye, the fact that the scope of health insurances varies on the basis of hospital and doctor specialization and the increasing fees of health insurances may cause telemedicine insurances to grow as an alternative or complementary to health insurances in the future. In addition, telemedicine has gained a legal basis in Turkey with the Regulation on the Provision of Remote Health Services published in the Official Gazette in 2022. Apart from these two areas, rental insurances and natural disaster insurances (especially earthquake insurances) be shown among the areas that have potential to grow rapidly.