The insurance arbitration system is an alternative dispute resolution mechanism aimed at resolving disputes arising from insurance contracts more quickly and efficiently, without resorting to the courts.
The Insurance Law [“Law”] adopts arbitration as a method for resolving disputes stemming from insurance contracts and outlines the procedures for its application in detail. Article 1 of the Law lists the establishment of a legal framework for the insurance arbitration system and the development of procedures and principles for dispute resolution among its primary objectives.
Legal Basis
The insurance arbitration system is regulated under Article 30 of the Insurance Law No. 5684. According to this article, insurance companies may become members of the Insurance Arbitration Commission and disputes between insured individuals and member companies may be resolved through arbitration. Additionally, for issues not explicitly regulated under the Law, the provisions of the Civil Procedure Law No. 6100 [CPL] shall apply.
Furthermore, the fundamental framework for insurance contracts is set out in Article 1401 of the Turkish Commercial Code No. 6102. This provision states that insurance contracts are not subject to form requirements and are established through mutual agreement. Therefore, arbitration plays a significant role as an alternative method in resolving disputes arising from such contracts.
Application Process
The application process to the Insurance Arbitration Commission begins with a preliminary application by the insured. Accordingly, the insured must first submit a written application to the relevant insurance company, requesting resolution of the dispute. This application must clearly state the nature of the dispute and the demand of the insured, either in the form of a petition or a written notice.
Upon receiving the application, the insurance company is required to respond within 15 days. The company may either accept the claim and fulfill the demand or reject it by providing a negative response. Failure to respond within the given timeframe is also considered a rejection.
If a positive response is not received—that is, the claim is rejected or no response is given within the legal period—the insured has the right to apply to the Insurance Arbitration Commission. During the application, the insured must include all relevant documents, such as policy information, correspondence with the insurance company and other supporting evidence explaining the nature of the dispute.
Once the Commission accepts the application, an independent arbitrator is assigned based on the nature of the dispute. The arbitrator carefully examines the evidence, may request additional information from the parties if necessary and aims to render a fair decision after evaluating all aspects of the dispute.
Legal Remedies
According to paragraph 12 of Article 30 of the Insurance Law, the decisions rendered by arbitrators are subject to appeal depending on the monetary value of the dispute. For disputes involving amounts less than 15,000 TRY, the arbitrator’s decision is final and no appeal or objection is allowed.
However, if the dispute involves an amount of 15,000 TRY or more, the parties have the right to appeal, initiating the relevant legal procedures. If the disputed amount exceeds 238,730 TRY, the parties are also entitled to apply for judicial review by a higher court. Accordingly, the law provides different legal remedies based on the financial value of the dispute, allowing parties to exercise their right to object or appeal within certain limits.
Advantages
The insurance arbitration system offers numerous advantages to both insurance companies and policyholders. For example, while it may take years to reach a verdict through litigation, arbitration typically yields a decision within four months. Another key advantage is its lower cost. Unlike court proceedings, which involve various fees such as court charges and expert witness costs, arbitration tends to be significantly more economical.
Conclusion
The insurance arbitration system is an important alternative dispute resolution mechanism designed to resolve insurance-related disputes in a swift, cost-effective, and efficient manner. For policyholders, it offers a quicker and less expensive route to justice compared to lengthy court processes.
The structure, legal basis, and application process of the Insurance Arbitration Commission are designed to protect the rights of policyholders. Moreover, the availability of different legal remedies depending on the monetary value ensures that disputes are assessed fairly. The obligation for arbitrators to render decisions within four months prevents delays and ensures prompt resolutions.
In conclusion, the insurance arbitration system stands out as an effective legal mechanism that enhances the reliability of the legal system, expedites dispute resolution, and provides significant financial benefits to the parties involved.
By Deniz Buyuksengun, Senior Counsel, Nehir Buyuksengun, Legal Intern, Guleryuz Partners