An amendment to Regulation on Insurance Agencies (the “Regulation”) has been published on the Official Gazette dated June 9, 2016 and numbered 29737. The Annex 1 of the Regulation with respect to the educational level and professional experience period of the employees of insurance agencies has been amended.
Amendment to the Regulation on Insurance Agents (published in the Official Gazette dated April 22, 2014 and numbered 28980) has been published. Pursuant to the amendments, each party may terminate the agency agreement by giving a notice before 3 months to the termination date. The agreement can be terminated even if the agreement has been executed for a fixed term in case a valid reason appears. Valid reasons shall be determined in the agency agreements and any reason which has not been determined as a valid reason in an agency agreement will not justify the termination of the agreement. The amendments on the agreement against the agents enter in force minimum 2 months after the amendment date. This Regulation enter in force in six months as of the publish date (January 16, 2016). Parties of an agency agreement should amend the agency agreements within this 6 months period.
A new Regulation on Capital Requirements regarding Insurance, Reinsurance and Pension Companies has been published by the Undersecretariat of Treasury in the Official Gazette dated August 23, 2015 numbered 29454. The purpose of the Regulation is to regulate the requirements regarding capital adequacy for insurance, reinsurance companies and pension companies, and liabilities of the relevant companies. Pursuant to Article 7 of the Regulation, insurance, reinsurance and pension companies shall have capital in compliance with the total amount which should be calculated for non-life insurance, life insurance and pension.
Within the scope of Article 7, 5 types of principles regarding required capital have been enumerated: (i) Required capital in compliance with bonus principle, which is including relevant rates applying on gross premiums and company’s mischief defined in article. (ii) Required capital in compliance with mischief principle, which is stipulating brut mischiefs calculating according to risk groups defined above.
In addition, pursuant to Article 7(5) of the Regulation, required capital for life units is the total amount which should be calculated according to liability and risk. (i) Required capital in compliance with liability principle states the amount calculated by rates applying on mathematical provisions and one-year life assurances. (ii) Required capital in compliance with risk principle defines the capital from which mathematical provisions and unearned premiums are subtracted.
Within the scope of Article 7(6), required capital for pension business branch is stipulated. It’s determined as %5 of saving available in individual pension accounts. The second manner which is based on risk types has been specified within Article 8. There are 5 types of principles below this article: (i) In active risk calculation, active account items partaking in balance sheet are multiplied with risk weightings available in the referred article. (ii) Reassurance risk calculation is a risk type in which total reassurance premium is considered.
For every different transferred risk, there are different multipliers determined in Article 8(2) which shall be applied on herein risks. (iii) Extreme bonus increase risk calculation determines the multiplier of 0,2 for the circumstance in which the brut premiums’ annual increase rate is more than the sector increase rate. (iv) In provision for outstanding claim risk calculation, multipliers partaking in Article 8(5) is applied on provision for outstanding claim amount. (v) Currency risk is calculated by considering total foreign exchange assets, liabilities and similar financial instruments.
A new Regulation on Insurance and Reinsurance Broker has been published by the Undersecretariat of Treasury in the Official Gazette dated May 27, 2015 numbered 29368. The purpose of the Regulation is to regulate the brokerage activities and principles of the brokering. In accordance with the Regulation, a real person broker should be resident in Turkey and the head office of a legal entity broker should be located in Turkey in order to operate brokerage activities. Pursuant to Article 7 of the Regulation, brokers who are not established in Turkey may engage in brokerage activities by opening a branch office in Turkey. As per Article 12, following the application, the Undersecretariat of Treasury shall evaluate the application and give the authorization certificate if the applicant complies with the requirements as stated under the Regulation. According to Article 15 of the Regulation, the brokering authorization certificate executed in favor of the broker by the represented party should explicitly state the scope of authority. Moreover, the directors of legal entity brokers should comply with minimum standards of education and business experience which have been stipulated under Annex 1 of the Regulation.
The Communique on Obligatory Personal Accident Insurance for Mine Workers Tariff and Instructions has been published by the Prime Ministry in the Official Gazette dated May 6, 2015 and numbered 29347. Accordingly includes that the real and legal persons who operate in underground and above ground coal mining, underground mining other than coal mining are obligated to take out a policy for the workers for the accidents which may occur during the operation as of the date of publishing of the Communiqué. Furthermore, the warranty amount and net premium per worker has been determined as TL 150,000.00 and TL 700 respectively. In addition to the above it has been regulated that damages which amount to more than TL 1,500,000.00 are to be reassured by the insurance companies to the Extraordinary Risk Management Center which is to be determined by the Undersecretariat of Treasury.
The Regulation on Activities Deemed within the Scope of Insurance, on Insurance Agreements in Favor of Consumers and on Insurance Agreements Concluded over Distance (the “Regulation”) was published by the Undersecretariat of Treasury (published in the Official Gazette dated April 25, 2014 and numbered 28982). Article 8 of the Regulation, as an example, applies agreements executed in favour of the consumer pursuant to a specific contractual relationship. As described therein, the insurant shall not act in a way which could mislead the consumer that the coverage has been provided by himself. The contract which constitutes the basis of the insurance agreement shall explicitly state the company providing the insurance coverage and that the coverage amount shall be paid by the company bearing the risk. Furthermore, pursuant to Article 9 of the Regulation, insurance agreements may be executed through all media which enables the execution of agreements without the need to convening parties together.
A new Insurance Agents Regulation (published in the Official Gazette dated April 22, 2014 and numbered 28980) was published by Undersecretariat of Treasury, and the previous regulation (published in the Official Gazette dated April 14, 2008 and numbered 26847) was abolished at the same time. Among other changes; agents are now obliged to execute agreements with insurance companies. Furthermore, legal entity agents shall employ at least one technical staff in addition to a director. Directors of legal entity agents shall comply with minimum standards of education and business experience which have been stipulated under Annex 1 of the Regulation.
Regulation Regarding Financial Structure of Insurance, Reinsurance and Pension Companies (published in the Official Gazette dated August 7, 2007 and numbered 26606) was amended on with the Regulation published in the Official Gazette dated March 29, 2014 and numbered 28956.
Pursuant to the new Ministry Decree on Reinsurance Support for Excess of Loss for Compulsory Earthquake Insurance Risks Undertaken by DASK (Turkish Catastrophe Insurance Pool) (published in the Official Gazette dated January 10, 2014 and numbered 28878), taking into account the reinsurance and protection program for the period between November 1, 2013 – October 31, 2014, for reinsurance part which exceeds 800 million Euros for excess of loss, 10% from each part corresponding to 235 million Euros shall be allocated to DASK as reinsurance support for the excess of loss.
The Regulation on the Insurance Information and Monitoring Center (published in the Official Gazette dated August 9, 2009 numbered 26962) has been amended on March 5, 2013. The amendments are with respect to the articles on the management committee, the central internal functioning and studies that will be requested by the Undersecretariat.