An Amendment to the Insurance Agencies Regulation Has Been Published

The Insurance Agencies Regulation (“Regulation”), published in the Official Gazette numbered 28980 on April 22, 2014, sets forth the principles and procedures regarding the qualifications, establishment, organization, authorities, responsibilities, and activities of natural and legal persons engaged in insurance agency activities.

With the newly published Amendment to the Regulation (“Amendment”) in the Official Gazette dated January 22, 2025 numbered 32790, provisions have been introduced regarding the minimum capital requirements for insurance agencies, application and registration processes, advertising and corporate identity practices, the revocation of compliance certificates, measures to be taken, and the increase or decrease of specified amounts.

Our explanations regarding the implemented changes under the Amendment are summarized below.

Minimum Paid-Up Capital Requirements for Insurance Agencies

Under the Regulation, which sets capital requirements for insurance agencies, the paid-up capital for legal entities and asset totals for natural persons was previously set at a minimum of 50.000 TL. However, with the Amendment, this minimum amount has been increased to 3.250.000 TL for legal entity agencies as paid-up capital, while it has been stipulated that the asset total required for natural person agencies must not also be less than this amount.

Additionally, the provision requiring that at least 50% of the minimum paid-up capital or declared assets must only consist of cash, deposits, or easily convertible investment instruments such as government domestic borrowing securities has also been preserved.

This minimum paid-up capital requirement introduced by the Amendment will not apply to existing agencies or natural and legal persons who have submitted applications to the chambers prior to the publication date of this article.

Capital Requirement for Agencies Opening Branches

According to the provisions of the Regulation, the minimum capital for agencies opening branches was set at 300.000 TL for the head office and 25.000 TL for each branch. In addition, for those willing to engage solely in distance sales without opening a branch, the minimum capital was set at 300.000 TL. With the Amendment, these amounts have been revised; the minimum capital for the head office has been increased to 4.000.000 TL and the amount for each branch has been raised to 325.000 TL. The minimum capital for agencies willing to conduct distance sales without opening a branch has also been increased to 4.000.000 TL.

The minimum capital requirement introduced by the Amendment will not apply to existing agencies or natural and legal persons who have submitted applications to the chambers prior to the publication date of this article.

Equity Requirement

One of the provisions introduced by the Amendment pertains to the equity requirements for agencies that have branches or are engaged in distance sales. According to this provision, such agencies are required to maintain equity equal to at least 4% of the total premium amount they have intermediated by the end of each year. However, this amount cannot fall below 4.000.000 TL under any circumstances.

If, as a result of year-end calculations, an additional capital requirement arises, the shortfall in capital must be fully covered by no later than the end of June of the relevant year.

Compliance Certificates and Registration of Insurance Agencies

The Amendment stipulates that the applications of agencies with complete documentation will now be evaluated electronically by the Union of Chambers and Commodity Exchanges of Turkey (“TOBB”) and submitted to the Ministry of Trade for approval. Applications deemed suitable by the Insurance and Private Pension Regulation and Supervision Agency will be reported to TOBB for registration. Additionally, it has been explicitly stated that this notification will serve as a compliance certificate.

Another new provision introduced by this amendment is a time limitation for agencies that have obtained a compliance certificate. Accordingly, agencies that have received a compliance certificate are now required to apply to TOBB for registration in the register within a maximum of six months.

Obligations of Insurance Agencies in the Issuance of Insurance Policies

Insurance agencies are now obligated to transmit accurate and complete information on the parties and the beneficiaries of the insurance contract to the insurance company.

Scope of Advertisement, Promotion and Billboard Arrangements

The Regulation previously required the inclusion of the agency title only on letterheads, posters, advertisements, and signage. However, with the Amendment, this scope has been expanded to include websites and all other electronic platforms. Accordingly, insurance agencies are now obligated to display their agency title not only on letterheads, posters, advertisements, and signage, but also on websites and other electronic platforms.

Additionally, it is prohibited to solely use the term “insurance” in areas where the agency title appears, including electronic platforms, without including the terms “agency” or “brokerage.”

Obligations on Misleading Corporate Identities

Under the Amendment, agencies and their branches are prohibited from using misleading and deceptive corporate identity elements, such as business names, logos, and emblems, that could give the impression that they are an insurance company or engage in activities other than insurance agency services or any operation of institutions and organizations outside the agency scope.

Obligations Regarding the Reporting of Insurance Company and Authorization Information

Under the Amendment, agencies are required to inform individuals willing to enter into contracts, about the insurance companies they represent and the authorities granted to them by these companies. Furthermore, they must publish this information on their websites.

Changes Regarding the Supervision of Insurance Agency Activities and the Revocation of Compliance Certificates

The Regulation previously provided for the temporary suspension of an agency's activities for up to six months if the agency failed to rectify its situation following monitoring by the Ministry. However, under the Amendment, the suspension of an agency's activities or the revocation of its compliance certificate will now be carried out based on monitoring and evaluation by the Regulatory and Supervisory Authority for Insurance and Private Pensions and a decision by the Insurance and Private Pensions Regulatory and Supervisory Board (“Board”).

Additionally, the Amendment stipulates the immediate temporary suspension of an agency's activities to prevent the rights and interests of individuals involved in an insurance contract from being jeopardized.

New Additional Provision: Increase and Update of Amounts

The Amendmentprovides that the Board will have the authority to increase or decrease the fixed and proportional amounts specified in the Regulation by up to 100% and 50%, respectively. Additionally, the amounts related to the minimum paid-in capital and assets of insurance agencies will be updated annually according to the domestic producer price index growth rate announced by the Turkish Statistical Institute in January, unless otherwise determined by the Board.

The Amended Regulation will enter into force on the date of its publication, January 22, 2025.