"Surety insurance should be recognized by the courts"

Underlining that in order to grow in surety insurance and ensure continuity in this field, its recognition must first be ensured legislatively, Kasım Yılmaz, General Manager of Koru Sigorta, said: "Surety insurances to be offered to courts and execution offices will increase the production appetite of insurance companies in these areas and I believe that the financial results will be positive for the sector in the long term."

Commenting on surety insurance, Mr. Kasım Yılmaz, General Manager of Koru Sigorta, said: "The financing needs of companies are increasing day by day and they try to meet these needs with cash and non-cash loans. For non-cash loans, a letter of guarantee from banks or surety insurance from insurance companies can be requested. With the introduction of the general conditions for surety insurance in 2017, surety insurance has started to be on the agenda of insureds and its awareness has only recently started to increase compared to bank letters of guarantee. In addition to the work carried out by some companies in the insurance sector regarding surety insurance, the support of the Insurance Association of Turkey and SEDDK has contributed greatly to the positive developments in this field and to the increase in awareness."

'SURETY INSURANCE IS NOT ACCEPTED IN COURTS'

Yılmaz continued his words as follows: "With the regulations made in the Enforcement and Bankruptcy Law and other legislation, the assets that can be deposited in courts and enforcement offices are listed in a limited manner, and "surety insurance" is not included in the scope of these regulations. In this sense, insured persons are often forced to resort to "bank letters of guarantee", which again adversely affects their credit limits with banks." Emphasizing that the need for collateral before courts and execution offices is increasing day by day in disputes arising from insurance contracts and that this situation creates great burdens both in number and amount, Yılmaz said, "In addition, the fact that there is no legislative regulation regarding the additional period for the suspension of execution of the decisions rendered as a result of the Appeal Arbitrator's examination in disputes before the Insurance Arbitration Commission puts companies under the risk of large-scale foreclosure following the notification of the decision. During the continuation of the proceedings, bank letters of guarantee exceeding millions of liras have to be submitted to the courts and/or enforcement offices in order to stop the execution/remove the attachment and to exercise the right of appeal/appeal. For this reason, the inclusion of surety insurances in the regulation will replace bank letters of guarantee."

'SOLUTION IS TO AMEND THE LAW'

Stating that there is a need to make regulations in this sense by adding "surety insurance" among the alternatives that individuals and companies can provide collateral in the Enforcement and Bankruptcy Law and other legislation, Yılmaz said, "In this way, it is certain that both individuals and companies will be financially relieved and a great gain and insurance perception will be created in the sector. In addition, considering the prolonged judicial periods and the excessive increases in the commission fees paid for bank letters of guarantee, it is certain that this situation has become a major risk and expense item for companies and its burden will increase day by day. I think that this major financial factor in front of the use of the right of appeal, which is the most important element of the trial, should be addressed in terms of fair trial and file economy and the need for regulation should be expressed for all sectors."

'THE ABILITY TO ISSUE PROMISSORY NOTES WILL GROW THE SECTOR'

"If bail insurance is included in the Law on Execution and Bankruptcy, the cash payments transferred outside the sector will remain within the insurance sector and will contribute positively to total premium production," Yılmaz said: "In order to grow in surety insurance and ensure continuity in this field, I am of the opinion that this effect will be beneficial for the growth of the policy pool after the recognition is first ensured legislatively. Surety insurances to be offered to courts and execution offices will increase the production appetite of insurance companies in these areas, and I believe that the financial results will be positive for the sector in the long term."