Insurers’ Obligation to Inform Under Turkish Law

Transparency under insurance contracts has many layers, and its practice has enlarged in the course of the evolution of consumer protection. In respect of insurance contracts, the insurer needs policy owner’s (insured/ beneficiary) information to calculate the risk premium to be provided in the contract. On the other hand, persons who intend to enter into a specific insurance relationship need to have sufficient information regarding the subject, coverage and other characteristics of the insurance contract. Under Turkish Law, this protection is ensured within the regulation of insurers' obligation to inform the policy owners in relation to the contract. Besides, insurers' failure to inform, shall have certain consequences which is addressed in detail below.

What is the insurer's obligation to inform in relation to insurance contracts?

In general, “informing” as a legal concept means the transfer of necessary information between parties to a potential contractual relationship. Irrespective of the contracts where the obligation to inform is specifically required, the parties in a contractual negotiation shall inform the other party in good faith[1].

Insurer's obligation to inform is regulated under article 1423 of Turkish Commercial Code ("TCC") numbered 6102 and dated February 14, 2011. As TCC only regulates the pre-contractual obligation to inform, other pieces of legislation shall be applied in conjunction with the provisions under TCC. Regulation on Furnishing Information in Insurance Contracts (hereinafter will be referred as the “Regulation") numbered 26684 and dated October 28, 2007 covers both insurer's pre-contractual obligation to inform and obligation to inform during the contract term and also regulates the principles and procedures regarding the obligations to be met by the insurer.

According to article 5 of the Regulation, insurer's obligation to inform towards the persons who intend to be a party of the insurance contract, shall be fulfilled verbally and in writing. Since it is a means of proof, informing in writing is essential in practice. However, parties mostly do not executes contracts in person, rather engages insurance contracts by using remote communications such as phones, call centers, internet, channels etc. In this regard, the requirement of written information may not be sought. Even so, article 5 of the Regulation states that the insurer is obliged to prove that the least information is provided to the policy owner[2]. Obligation to inform shall commence prior to the formation of the insurance contract and continue during the contract term.

According to article 8 of the Regulation, the content and the form of the "Information Form" shall be determined by the Under Secretariat of Treasury, accordingly the content of the Information Form shall cover at least the following: (i) title and contact information of the insurer and the agent, (ii) general notices regarding the contract to be signed, (iii) coverage provided under the contract, (iv) exceptions of the insurance coverage as well as the assets and risks which are not covered by each type of insurance that might be covered by an supplementary contract on the condition that it is specified in the policy, or the information on special provisions and clauses which might be included in the contract, (v) general information concerning the indemnity and rules for the payment of claims and (vi) information regarding complaints and information requests as well as arbitration membership. Pursuant article 9 of the Regulation, the insurer shall fill the relevant sections in the Information Form in accordance with laws and regulations.

After the contract duly formed, the insurer’s pre-contractual obligation to inform turns into a general obligation to inform which means that insurer shall be obliged to notify the policy owner in ten days upon the changes in the relevant laws and regulations, bankruptcy or liquidation, cancellation of licenses in relevant branches and all changes and updates that may affect the policy owner’ debts and rights deriving from the contract[3].

Insurance Agencies' Obligation to Inform

Furthermore, persons who are seeking to execute an insurance contract, are faced with numerous insurance intermediaries that facilitate the placement and purchase of insurance. Insurance agencies are deemed as the leading actors in this industry. As a result of this, the question is referred whether such agencies that are intermediary to find insurers have an obligation to inform. Since the obligation to inform commences during the contractual negotiations under Turkish Law, the agent who has been authorized to execute the contract is obliged to inform the policy owners during the negotiation process. Therefore, the obligation to inform depends on the type of the agency as to: (i)whether the it is only authorized to mediate which is B type agency (ii) or it is also authorized to conclude agreements which is A type agency. This division is only made to determine the pre-contractual obligation of the insurance agencies. Since it is not possible to distinguish between A-type agencies and B-type agencies after the contract is concluded, the insurance agencies will no longer pursue such obligation.

 

What are the consequences in the event of a breach of obligation to inform?

Insurer’s obligation to inform may not fulfilled at all or it may be fulfilled unduly which are both likely to result in violation. In case of a failure, the contract shall be deemed as having been concluded in accordance with the terms and conditions written in the policy, unless the policy owner objects to the conclusion of the contract within fourteen days pursuant to article 1423(2) of TCC. Fourteen days period shall commence prior to the conclusion of the contract in accordance with the doctrine.

Article 7 of the Regulation enumerates the situations which will cause a violation to obligation as: (i) if the obligation to inform is not duly performed, (ii) if the misleading information is provided to insurer, (iii) if the Information Form regulated as per Article 8 of this Regulation is not delivered properly, (iv) if the information in the Information Form is inaccurate. If one of such conditions shall occur and effect the conduct, the insured shall have a right to terminate the contract and claim for damages.

Policy owner’s right to object against policy under TCC and right to compensation under the Regulation in terms of obligation to inform contradicts[4]. In this regard, Court of Cassation in a decision has stated that considering the fact that the policy owner did not object against the scope and conditions of the policy within fourteen days after it is issued, the policy owner’s claim for damages shall be dismissed; whereas the policy owner’s claim for compensation shall be considered incorrect[5].

Since two provisions are in conflict, it is recommended for persons who intend to be a part of an insurance contract to exercise their to right to object against the conditions enshrined in the policy within fourteen days after the policy is issued.

Consequently, the obligation to inform under Turkish Law meaning the insurer’s obligation to notify the policy owner regarding the objectives, the scope and related conditions that can affect the conduct of the policy owner whether to sign the contract, is aimed to protect the consumers; as an established contemporary insurance practice.

 

Author: Ezgi Ceren Aydoğmuş

[1] Yazıcıoğlu, E. (2019) Sigorta Hukuku, Filiz Kitabevi, Güncellenmiş 2. Baskı, s.97

[2] Yazıcıoğlu, E. (2019) Sigorta Hukuku, Filiz Kitabevi, Güncellenmiş 2. Baskı, s.99

[3] Eldeleklioğlu, İ. “6102 Sayılı Türk Ticaret Kanunu Ve Sigortacılık Mevzuatı Uyarınca Sigortacının Aydınlatma Yükümlülüğü”

(Access:  https://dergipark.org.tr/en/download/article-file/790958)

[4] Eldeleklioğlu, İ. “6102 Sayılı Türk Ticaret Kanunu Ve Sigortacılık Mevzuatı Uyarınca Sigortacının Aydınlatma Yükümlülüğü”

(Access: https://dergipark.org.tr/en/download/article-file/790958)

[5] Yargıtay 17. Hukuk Dairesi, 2018/342 E. 2019/12026 K.