A new regulation amending the Regulation on the Operations Assessed Within the Scope of Insurance, Insurance Contracts Concluded In Favour of Consumers and Distance Insurance Contracts has been published in Turkish Official Gazette on 9 May 2020 (the “Amendment”). The Amendment extends the scope of the electronic platforms to be used for concluding insurance contracts by recognizing the use of permanent data keeper platforms and mobile applications/distant sales devices to sell insurance policies and enables the enterprises for which insurance brokerage is not their primary field of business to act as insurance brokers to sell policies in relation to goods and services that they offer.
1. Extension of the Scope of Electronic Platforms
a. Permanent Data Keeper Platforms
In lieu of the term of “electronic platform”, the Amendment introduces the term “permanent data keeper”. This term is defined as the “text message (sms), email, internet, disk, CD, DVD, memory card (flash disk), a system to be established through Insurance Information and Surveillance Center or E-State and all kinds of similar vehicles or media that enable the insurer, insured and the beneficiaries to record information they provide or are provided with for a reasonable time that would enable them to review and copy it in its unamended form”. This definition extends the scope of electronic platforms by introducing the possibility of concluding insurance contracts in all permanent data keeper platforms.
b. Mobile Applications and Distant Sales Devices
The Amendment makes provision permitting the sale of the insurance via electronic kiosks, websites and mobile application by persons and institutions authorized to provide insurance from their work places. Nevertheless, certain institutions which would not normally be authorized to provide insurance are exempted from this rule: (i)The kiosks for the sale of the compulsory earthquake insurance can only be installed by Natural Disaster Insurances Authority (DASK) in Land Registries and the Authorities of Water and Electricity, and (ii) The kiosks for the compulsory insurance of highway motor vehicles can only be installed by the Executive Committee of Insurance Agencies of the Turkish Union of Chambers and Exchange Commodities (“SAIK”). All companies that are licensed to provide compulsory insurance for highway motor vehicles shall permit the sale of insurance policies by such kiosks. The commission prices incurred for the proxy of these electronic kiosks will be allocated to the agents registered in the board of agencies only after the purchase price of the kiosks are deducted from the sum. SAIK is liable for the organization of the sale of all other types of compulsory insurances via electronic kiosks while Agricultural Insurance Pool (Tarsim) is authorised for the organization of the electronic kiosks for the state-funded agricultural insurances. As a last note, the provisions for the insurances indicated under (i) and (ii) shall enter into force on 15 June 2020.
2. Extension of the Right to act as an Insurance Broker
The Amendment enables enterprises for which insurance brokerage is not the primary field of business to act as insurance brokers in relation to goods and services that they offer. The new article inserted by the Amendment sets out the conditions needed for such enterprises to obtain authorization to serve as intermediaries between the insurers and their own customers. They are:
a) The insurance is in relation to the goods and services that such enterprises provide, these enterprises are entitled to sell insurance merely for the
(i) Breakage, loss, theft, malfunctioning of or any other damage to the goods
(ii) loss, theft of or any other damage to luggage
(iii) other risks in relation to travel services
b) The insurance coverage shall not be a complex product, it shall be simple and easily understood and the exemptions, limits and the duration shall be standard and on product basis.
c) The insurance provided shall not be a liability insurance, life insurance or motor vehicle insurance.
d) Annual Premium for insurance may be increased by taking into account the change in the Consumer Price Index at the end of each year as compared to that in December of the previous year and shall not in any case exceed TRY 3,000.00.
e) The term of the insurance along with renewals shall not exceed 5 years.
f) Entreprises for which insurance brokerage is not the primary field of business shall not charge commission fees on premiums for the insurance services they provide to the consumers. However, they can request a service fee independent of the premiums.
g) The title of the company providing insurance under this article, the subject/scope of the insurance and the place of recourse in case the risk materializes shall be overtly and clearly communicated to the customer.
h) The enterprise shall refrain from any conduct that could give rise to the impression that the insurance cover was offered by the enterprise. The insurance company shall take all necessary measures in this regard.
i) It is obligatory to inform the Ministry of Treasury and Finance one month before the commencement of selling insurance under this article. The ministry can request revisions to be made within the framework of the information provided.
For Turkish law the use of the term of ‘insurance sale’ is a novelty. This new regulation is prone to modify remarkably the commercial relations regarding insurance in Turkey. It seems fair to say that for many sectors insurance companies would not need the intermediary services of insurance brokers or agents since they can directly work with enterprises providing goods and services to their customers.
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