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Legal Alerts

Turkey increases protection of insurance agents at the expense of insurers

Legal Alerts
Banking & Finance

Recent development

The Undersecretariat of the Treasury has strengthened the protections of insurance agents in Turkey by increasing the authority of the Insurance Agents Executive Committee (“IAEC”), expanding the mandatory terms of agency agreements, and introducing significant changes to personnel affairs, governance and branch operations.

The Treasury introduced these changes by amending its Regulation on Insurance Agents on January 16, 2016. The amendments will enter into force on July 16, 2016.

What’s new

• A body composed solely of insurance agents, the IAEC, will determine the minimum number of personnel to be employed by each insurance agent by taking into account the insurance agent’s qualifications, subject of activity and size.

• The only conditions under which agency agreements can be terminated are clearly specified: (i) indefinite-term agency agreements can be terminated by either party for “just cause” or with three months’ prior notice in accordance with the Turkish Commercial Code, and (ii) fixed-term agency agreements can be terminated by either party for “just cause”.

• The regulation requires agency agreements to specifically state all “just causes” for termination; an insurer cannot rely on just cause unless it is specifically set under the agency agreement. This strict requirement significantly increases the burden on insurers’ to properly draft agency agreements, in particular the termination provisions.

• Any amendments to the terms and conditions of an agency agreement that are disadvantageous to the insurance agent are only effective two months after the change.

• The insurance agency agreement between an insurer and agent must set out the commission structure on a segment basis.

• Current insurance agency agreements must be brought into compliance with the amendments by July 16, 2016.

• Branch openings have been liberalized, eliminating: (i) Treasury approval to open a new branch, (ii) the requirement to hire a branch manager, (iii) the requirement for managers at headquarters to have certain experience, (iv) the prohibition on a branch operating on the premises of another insurance agent, and (iv) the requirement of quarterly financial reports to the Treasury by insurance agents operating through branches or distant sales services (along with its headquarters).

• General managers, assistant general managers and managers of insurance agents must (i) be domiciled in Turkey, (ii) have the required technical and educational qualifications set out under the regulation, and (iii) not have committed certain crimes set out in the regulation.

• Operational requirements for agents now only refer to human resources requirements such as carrying out agency operations through technical personnel, general managers, assistant general managers and managers. Previously, the Treasury specifically set out the required physical, technical and administrative infrastructure.

• Rules regarding technical personnel have also changed: (i) private pension intermediaries are now required to pass insurance agent examinations, and (ii) technical personnel are not longer limited to working with a single insurance agent.


The Treasury has increased its protection of insurance agents vis-à-vis the insurers whose products they sell granted more authority to the IAEC – a committee composed of insurance agents – and imposed strict and, to a certain extent, impractical requirements, such as requiring agency agreements to foresee and prescribe all just causes for termination. Furthermore, the Treasury has relaxed infrastructure, reporting and personnel requirements for insurance agents.

Please contact us if you have questions about how these changes might affect your company.