Progress through transparency: Turkey’s new insurance law

In response to growing pressures on Turkey from foreign investors, the IMF and the EU to strengthen its financial services sytem in which the roles of banks and non-banking institutions are clearly defined and in which they are effectively supervised by the regulatory authorities, that country’s parliament passed Insurance Law No. 5684 on 14 June 2007. Here, Turkish law firm Hergüner Bilgen Özeke* , considers the scope and implications of the new legislation. The key questions addressed by the firm’s attorneys are: what new changes are being introduced by the law and secondary legislation? What are the issues regarding the protection of policy holders? What are the amendments to the legal and organizational structure of insurance and reinsurance companies? And what are the changes in the solvency requirements for these companies?

Liberalization of the regulations governing Turkey’s insurance sector commenced in the 1980s, in parallel with legal reform of other financial sectors. Primarily the banking and securities industries were affected as the possibility of Turkey’s accession to the European Union gained credibility. This liberalization trend ultimately spread throughout the broader financial markets, and gathered momentum in the early 2000s.