Insurance and Reinsurance Arbitration in Turkey: Coverage, Indemnity and Subrogation Claims

Insurance and reinsurance arbitration in Turkey has become increasingly relevant for policyholders, insurers, reinsurers, brokers, corporate groups, lenders, contractors and third parties affected by insured risks.

Commercial insurance disputes may arise from property damage, business interruption, professional liability, construction risks, cyber incidents, product liability, marine losses, credit insurance, directors’ and officers’ liability, employer liability and other specialised policies.

Reinsurance disputes may concern treaty interpretation, facultative placements, aggregation of losses, claims cooperation, notification obligations, settlement authority, premium calculations and the amount recoverable by a ceding insurer from a reinsurer.

The principal legal questions commonly include:

• Whether the loss falls within the policy period;
• Whether the event is an insured risk;
• Whether an exclusion applies;
• Whether the insured complied with disclosure and notification duties;
• Whether several events constitute one occurrence;
• How the insured loss should be calculated;
• Whether a deductible, sublimit or aggregate limit applies;
• Whether the insurer became subrogated to the insured’s claim;
• Whether one insurer may seek contribution from another;
• Whether a reinsurer must follow the insurer’s settlement;
• Whether the dispute belongs before the Insurance Arbitration Commission or commercial arbitration.

Turkish law provides more than one form of insurance-related arbitration.

The Insurance Arbitration Commission, known in Turkish as the Sigorta Tahkim Komisyonu, is a specialised statutory mechanism for qualifying disputes between insured persons or persons benefiting from insurance and insurance organisations participating in the system, as well as specified claims against the Guarantee Account.

Commercial parties may also agree to institutional or ad hoc arbitration under the Istanbul Arbitration Centre Rules, another arbitral institution’s rules or a bespoke arbitration agreement. This second route is particularly important for large corporate insurance policies, reinsurance agreements, coinsurance arrangements and cross-border claims.

The distinction between these mechanisms must be understood before proceedings begin. A statutory insurance-arbitration application and an international commercial arbitration are governed by different jurisdictional rules, procedures, costs and methods of review.

This article explains the Turkish legal framework governing insurance and reinsurance arbitration, policy coverage, indemnity, liability insurance, subrogation, contribution among insurers, evidence, interim measures and enforcement of arbitral awards.

The Turkish Legal Framework for Insurance Disputes

The principal statutory sources include:

• Turkish Commercial Code No. 6102;
• Insurance Law No. 5684;
• International Arbitration Law No. 4686;
• Code of Civil Procedure No. 6100;
• Law No. 5718 on Private International Law and International Civil Procedure;
• Branch-specific insurance legislation;
• Insurance general conditions and regulatory instruments issued by SEDDK.

Article 1401 of the Turkish Commercial Code defines an insurance contract as an agreement under which, in return for a premium, the insurer undertakes to indemnify a measurable interest against the occurrence of an insured risk or to make another agreed payment upon an event connected with human life. The Code also recognises reinsurance as a separate arrangement under which the insurer may insure the interest it has itself insured.

The insurance provisions of the Turkish Commercial Code must be read together with the general and special conditions applicable to the relevant branch. SEDDK publishes official general conditions for property, liability, life, health, credit, financial and other insurance products. The applicable version should be identified by reference to the policy period and the specific insured risk.

Where an international insurance or reinsurance dispute contains a foreign element and Turkey is the seat, International Arbitration Law No. 4686 may govern the arbitration. The law recognises written arbitration agreements, including agreements incorporated by reference, and preserves the separability of the arbitration clause from the underlying contract.

Are Insurance Disputes Arbitrable in Turkey?

Most private commercial disputes concerning insurance contracts are capable of arbitration.

Examples include disputes about:

• Policy interpretation;
• Coverage;
• Exclusions;
• Indemnity;
• Premiums;
• Deductibles;
• Policy limits;
• Business interruption losses;
• Liability insurance;
• Subrogation;
• Contribution between insurers;
• Reinsurance recoveries.

These disputes usually concern economic rights over which commercial parties may dispose.

Greater caution is required where the requested relief concerns:

• Administrative sanctions imposed by SEDDK;
• Insurance licences;
• Mandatory regulatory capital;
• Criminal liability;
• Public enforcement powers;
• Rights of persons that did not consent to arbitration;
• Matters reserved by law to public authorities.

An arbitral tribunal may determine whether an insurer breached a private contractual obligation. It cannot annul a regulatory penalty or instruct SEDDK to exercise its statutory authority in a particular manner.

Three Principal Routes for Resolving Insurance Disputes

Insurance-related disputes in Turkey may proceed through three principal routes.

The Insurance Arbitration Commission

The Commission was established under Article 30 of Insurance Law No. 5684 to resolve disputes arising from insurance contracts between persons purchasing or benefiting from insurance and the party assuming the risk. Applications are initially reviewed by rapporteurs, and unresolved files are transmitted to independent insurance arbitrators.

Commercial Arbitration

Commercial insurance and reinsurance agreements may contain an arbitration clause providing for ISTAC, ICC or ad hoc arbitration.

This route is particularly relevant where:

• Both parties are commercial entities;
• The policy value is substantial;
• The transaction is international;
• The parties require a three-member tribunal;
• The dispute concerns reinsurance;
• The proceedings must be conducted in English;
• Several policies or contracts are involved.

ISTAC’s official model clause provides that disputes arising out of or connected with the contract may be finally resolved under the ISTAC Arbitration Rules. The parties may additionally determine the seat, language, number of arbitrators and law governing the merits.

State Courts

Certain disputes remain before Turkish courts because no valid arbitration agreement exists, the matter is not arbitrable or compulsory judicial action is required.

Court assistance may also be necessary during arbitration for interim attachment, evidence collection, enforcement or measures affecting third parties.

Insurance Coverage Disputes

A coverage dispute asks whether the policy responds to the event and loss claimed.

The analysis generally requires examination of:

1. The insured interest;
2. The insured risk;
3. The policy period;
4. The territorial scope;
5. The insuring clause;
6. Exclusions;
7. Endorsements;
8. Deductibles and sublimits;
9. Notification and cooperation duties;
10. Causation.

The arbitral tribunal should interpret the entire insurance contract rather than isolating one sentence.

The relevant contractual record may include:

• Proposal forms;
• Underwriting questionnaires;
• The policy;
• General conditions;
• Special conditions;
• Endorsements;
• Renewal documents;
• Broker correspondence;
• Risk surveys;
• Claims correspondence.

The Importance of Policy Wording

Article 1425 of the Turkish Commercial Code requires the policy to state the parties’ rights, default-related provisions, general conditions and applicable special conditions in a clear and readable form.

Where the policy or its attachments differ from the proposal or agreed terms, provisions that are different and disadvantageous to the insured, policyholder or beneficiary may be invalid under the statutory rule.

A coverage arbitration may therefore require the tribunal to determine:

• Which document has contractual priority;
• Whether an endorsement validly modified the policy;
• Whether the insured received the applicable terms;
• Whether the insurer’s wording is clear;
• Whether a negotiated term prevails over standard conditions;
• Whether the exclusion applies to the specific facts.

The arbitration clause itself should also be examined. It may appear in the policy, an endorsement, a framework agreement or an incorporated set of conditions.

Pre-Contractual Disclosure

Insurance coverage frequently depends on information provided before the contract was concluded.

Under Article 1435 of the Turkish Commercial Code, the policyholder must disclose material facts known or required to be known during formation of the contract. A fact is considered material if its omission or incorrect disclosure would cause the insurer not to contract or to contract on different terms. Matters expressly asked by the insurer are presumed material unless the contrary is proved.

Disputes may concern whether the insured failed to disclose:

• Prior losses;
• Technical defects;
• Previous policy cancellations;
• Hazardous operations;
• Pending claims;
• Health information;
• Security weaknesses;
• Regulatory investigations;
• Construction changes;
• Known circumstances likely to produce a claim.

Where the insurer used a written questionnaire, Article 1436 generally limits the insured’s responsibility to the questions asked, except where a material fact was concealed in bad faith. The questions should be clear and written.

The tribunal must examine not merely whether information was incomplete, but also:

• Whether it was material;
• Whether the insurer already knew the true position;
• Whether the misstatement was intentional or negligent;
• Whether it was causally related to the loss;
• What remedy the governing law permits.

Aggravation of Risk

A policyholder may also have continuing duties after the policy begins.

Articles 1444 and 1445 regulate circumstances in which the insured risk is increased during the policy period. The policyholder must not aggravate the risk without the insurer’s permission and must notify specified changes within the statutory framework. Depending on the circumstances, the insurer may request additional premium, terminate the policy or seek a reduction of the indemnity.

Common disputes may involve:

• Change in the use of insured premises;
• Installation of hazardous equipment;
• Reduction of security measures;
• Change in production activity;
• Storage of combustible materials;
• Unnotified construction works;
• Expansion into higher-risk territories;
• Material cybersecurity changes.

The insurer should identify how the alleged change affected underwriting or the occurrence and amount of the loss.

A general assertion that the risk became “more dangerous” may be insufficient without technical and factual evidence.

Notification of the Insured Event

Article 1446 requires the policyholder to notify the insurer without delay after learning that the insured risk has occurred. Article 1448 additionally requires reasonable measures to prevent, reduce or stop the loss from increasing and to preserve the insurer’s recourse rights against responsible third parties.

Late-notification disputes commonly involve questions such as:

• When the insured first became aware of the event;
• Whether the policy is occurrence-based or claims-made;
• Whether notification of a circumstance was sufficient;
• Whether the delay prejudiced the insurer;
• Whether evidence was lost;
• Whether recovery against a third party was impaired;
• Whether the insurer waived the objection.

The arbitral tribunal should distinguish between a contractual condition defining coverage and a post-loss procedural obligation.

The legal consequence of late notice does not necessarily follow merely from the number of days that passed. The applicable policy wording, causation, prejudice and mandatory provisions must be considered.

Intentional Acts and Exclusions

Article 1429 generally requires an insurer to cover losses arising from negligence unless otherwise agreed, while allowing the insurer to avoid liability where the policyholder, insured or persons for whose conduct they are legally responsible intentionally cause the insured event for the purpose of obtaining compensation.

Policies may also contain exclusions for:

• Fraud;
• Wilful misconduct;
• War;
• Sanctions;
• Nuclear risks;
• Pollution;
• Cyber incidents;
• Wear and tear;
• Defective design;
• Contractual liability;
• Prior-known circumstances;
• Fines and penalties.

The insurer bears the responsibility of establishing the factual and contractual basis of a relied-upon exclusion under the applicable burden-of-proof rules.

The tribunal should avoid extending an exclusion beyond its wording merely because the underlying event is commercially undesirable.

Indemnity Claims under Turkish Insurance Law

The indemnity principle is central to property and loss insurance.

Article 1459 states that the insurer indemnifies the loss suffered by the insured. Article 1461 provides that the insurer’s liability is limited by the insured amount and that the insurer does not pay more than the actual loss merely because the insured amount is higher.

A claimant must therefore establish:

• An insured event;
• Actual loss;
• Causation;
• The applicable valuation method;
• Compliance with policy conditions;
• The amount remaining after deductions.

The tribunal may need to distinguish between:

• Repair cost;
• Replacement cost;
• Market value;
• Agreed value;
• Reinstatement value;
• Lost profit;
• Consequential loss;
• Mitigation expenses.

When Does the Insurance Payment Become Due?

Unless the parties agreed on payment through reinstatement or another form of performance, insurance compensation is ordinarily paid in money.

Under Article 1427, the payment becomes due after the insured event, delivery of the relevant documents and completion of the insurer’s investigation, and in any event after the statutory period calculated from notification. The general period is 45 days, while a 15-day period applies to life insurance. Once the obligation becomes due, the insurer falls into default without a separate notice.

Where the investigation cannot be completed within three months after notification, the Code provides for an advance of at least 50% of the loss or amount determined through the prescribed preliminary assessment mechanism.

An award should state clearly:

• The indemnity amount;
• The date on which it became due;
• Applicable interest;
• Any advance already paid;
• Currency;
• Deductible;
• Policy limit.

Underinsurance

Underinsurance exists where the insured amount is lower than the value of the insured interest.

Unless otherwise agreed, Article 1462 applies a proportional calculation where only part of the insured interest is damaged. The insurer pays according to the ratio between the insured amount and the actual insurance value.

For example, if an asset worth TRY 20 million is insured for TRY 10 million and suffers a TRY 4 million partial loss, the proportional rule may reduce the payable indemnity unless the policy contains a different arrangement.

Disputes may concern:

• The correct value of the property;
• Whether average provisions apply;
• Whether the policy was written on a first-loss basis;
• Whether valuation changed during the policy;
• Whether the insurer inspected or accepted the declared value.

Overinsurance

Where the insured amount exceeds the value of the insured interest, the excess is invalid under Article 1463. The insured amount and corresponding premium are reduced, and excess premium already collected is returned. A deliberately excessive policy taken out in bad faith to obtain financial gain may be invalid.

The indemnity principle prevents insurance from becoming a source of profit from the occurrence of a loss.

Overinsurance should be distinguished from an agreed-value policy, under which the parties determine the insurance value contractually, subject to the statutory rules concerning manifestly excessive valuations.

Multiple Insurance and Co-Insurance

The same interest may be insured by more than one insurer.

Article 1465 prevents the insured from recovering more than the insured loss through multiple policies. The policyholder must also notify insurers of the occurrence and other policies covering the same interest.

In co-insurance, each insurer is generally responsible in proportion to the amount it insured. If the policies make the insurers jointly liable, the insured still cannot recover more than the actual loss, and an insurer making payment may seek contribution from the others according to their respective obligations.

Arbitration disputes may involve:

• Identification of the lead insurer;
• Authority to settle;
• Allocation among participating insurers;
• Application of separate deductibles;
• Coverage under primary and excess layers;
• Contribution between insurers;
• Whether one settlement binds the others.

The arbitration clauses across all layers and policies should be compatible where coordinated proceedings may be required.

Business Interruption Claims

Business interruption claims are often among the most technically complex insurance disputes.

The claimant may seek:

• Lost gross profit;
• Continuing expenses;
• Increased cost of working;
• Additional mitigation expenses;
• Supply-chain losses;
• Losses during an extended indemnity period.

The tribunal may need to determine:

• Whether physical damage was required;
• Whether the damage occurred at insured premises;
• The relevant indemnity period;
• Expected revenue without the event;
• Market trends unrelated to the loss;
• Saved expenses;
• Governmental restrictions;
• Concurrent causes.

Accounting and industry experts may be necessary.

Historical financial results should not be applied mechanically where the business was expanding, declining or affected by separate economic conditions.

Liability Insurance Claims

Liability insurance protects the insured against specified liability to third parties.

Article 1473 provides that, unless otherwise agreed, the insurer covers liability arising from an event occurring within the policy period, up to the contractual amount, even where the resulting damage emerges later.

The policy may be:

• Occurrence-based;
• Claims-made;
• Claims-made-and-reported;
• Subject to retroactive dates;
• Subject to discovery or extended-reporting periods.

The tribunal should determine which trigger applies.

Defence Costs

Under Article 1474, reasonable expenses incurred in connection with a claim against the insured are covered by the insurer. Coverage of expenses exceeding the policy limit may depend on contractual wording. The insurer may also be required to provide an advance for these expenses upon request.

Disputes may concern:

• Choice of defence counsel;
• Insurer consent;
• Hourly rates;
• Settlement strategy;
• Allocation between covered and uncovered claims;
• Whether defence costs erode the policy limit;
• Costs incurred before notification.

The policy should regulate defence control and cooperation precisely.

Direct Claims against Liability Insurers

Article 1478 gives an injured party the right to claim directly from the liability insurer, up to the insured amount and within the limitation period applicable to the insurance contract.

This direct right does not automatically establish jurisdiction under every arbitration clause.

The injured party may not have signed the policy’s commercial arbitration agreement. The tribunal must determine whether the applicable law and clause permit the direct claimant to invoke or be bound by arbitration.

A direct claimant should not be forced into arbitration solely because the insured and insurer agreed to arbitrate, unless a legally valid basis exists.

The Insurance Arbitration Commission

The Insurance Arbitration Commission is distinct from ISTAC and ordinary international arbitration.

It was created specifically to resolve qualifying insurance-contract disputes between persons purchasing or benefiting from insurance and organisations assuming insurance risks. The system is administered through rapporteurs and independent insurance arbitrators.

A person may generally apply where:

• The dispute arises from an insurance contract;
• The respondent falls within the system’s scope;
• The claimant previously made a written application to the insurance organisation;
• The request was rejected or not answered within the applicable period;
• The dispute has not already been taken to another excluded forum.

The Commission’s official guidance states that an applicant should first submit the claim to the insurer. An application may then be made following a negative final response or the absence of a response within 15 business days, with a separate 15-day rule stated for traffic insurance.

The Commission does not accept disputes already referred to a court, consumer arbitration committee or arbitration under the Code of Civil Procedure.

Applications are generally examined on the file, although a hearing may be held where the arbitrator considers it necessary. The claimant should therefore submit all material evidence at the outset.

Compulsory Insurance and Commission Membership

For voluntary insurance, the date on which the insurer joined the Commission system may affect jurisdiction.

The Commission’s official guidance states that the insured risk should generally have occurred after the relevant organisation joined the system. For compulsory insurance disputes arising after 18 April 2013, an application may be possible regardless of whether the insurer is a Commission member.

The current member list and procedural limits should be checked before filing.

Monetary thresholds governing objections, tribunal composition and further review are periodically updated through the applicable legislation and official announcements.

Does the Insurance Arbitration Commission Resolve Reinsurance Disputes?

Ordinarily, the Commission is designed for disputes between policyholders, insured persons, beneficiaries or other qualifying insurance claimants and insurance organisations assuming the underlying risk.

Article 1403 of the Turkish Commercial Code states that reinsurance does not remove the direct insurer’s obligations to the policyholder and does not give the policyholder a direct claim against the reinsurer.

It follows that a contractual dispute between a ceding insurer and a reinsurer will generally require commercial arbitration or court proceedings based on the reinsurance agreement, rather than an application by the cedent to the Insurance Arbitration Commission. This conclusion follows from the Commission’s statutory scope and the legal separation between insurance and reinsurance contracts.

Reinsurance Arbitration in Turkey

A reinsurance agreement transfers all or part of the insurer’s risk to a reinsurer.

The original insurer remains liable to the insured. Reinsurance is a separate contractual relationship between the cedent and reinsurer.

Reinsurance may be arranged through:

• Facultative reinsurance;
• Quota-share treaties;
• Surplus treaties;
• Excess-of-loss treaties;
• Stop-loss treaties;
• Catastrophe covers;
• Retrocession.

Disputes commonly concern whether the ceded loss falls within the reinsurance agreement.

Common Reinsurance Coverage Issues

A reinsurance arbitration may involve:

• Attachment of risk;
• Treaty period;
• Definition of occurrence;
• Aggregation;
• Event limits;
• Retention;
• Reinstatement premiums;
• Exclusions;
• Claims notifications;
• Claims cooperation;
• Claims control;
• Settlement authority;
• Allocation across policy years;
• Currency conversion;
• Late premium;
• Bordereaux accuracy.

The reinsurer’s obligations are determined by the reinsurance agreement rather than solely by the underlying policy.

A settlement by the insurer may not automatically bind the reinsurer unless the reinsurance wording, applicable law and circumstances support that result.

Follow-the-Settlements and Claims Cooperation

Reinsurance contracts may contain provisions requiring the reinsurer to follow settlements made by the cedent.

Such clauses should be drafted carefully.

The tribunal may need to determine:

• Whether the underlying claim fell within the original policy;
• Whether it fell within the reinsurance cover;
• Whether the settlement was honest and businesslike;
• Whether the cedent complied with notification duties;
• Whether the reinsurer’s consent was required;
• Whether the reinsurer was prejudiced;
• Whether an ex gratia payment is recoverable.

A claims-cooperation clause may require consultation but leave final settlement authority with the insurer.

A claims-control clause may grant the reinsurer greater authority over the defence and settlement of the underlying claim.

The distinction can determine whether a failure to obtain approval defeats or reduces the reinsurance recovery.

Aggregation of Losses

Aggregation can change the amount payable dramatically.

The question may be whether numerous losses constitute:

• One event;
• One occurrence;
• A series of related occurrences;
• Several independent losses;
• One originating cause.

The answer may affect:

• Deductibles;
• Retentions;
• Policy limits;
• Reinsurance layers;
• Reinstatement premiums;
• Allocation across years.

Cyber incidents, natural disasters, product defects, mass claims and business-interruption losses commonly create aggregation disputes.

The tribunal should apply the exact contractual test rather than replace it with a general commercial impression.

Subrogation under Turkish Insurance Law

Subrogation enables an insurer that paid compensation to pursue the person legally responsible for the loss.

Under Article 1472, once the insurer pays the insurance compensation, it legally succeeds to the insured’s rights against responsible persons up to the amount paid. If the insured has already started a claim or enforcement proceeding, the insurer may continue it by proving payment without requiring the court’s or other party’s approval.

Where only part of the loss was paid, the insured retains its rights for the uninsured balance.

The insured must not act in a manner that destroys or impairs the rights transferred to the insurer. Otherwise, the insured may become liable to the insurer.

Subrogation in Liability Insurance

Article 1481 contains a corresponding subrogation rule for liability insurance.

After payment, the insurer succeeds to the insured’s rights against legally responsible persons up to the amount of the compensation. The insurer may also continue an existing case or enforcement proceeding by proving payment.

Subrogation should be distinguished from the injured party’s direct right against the liability insurer.

The two mechanisms operate in opposite directions:

• A direct claim allows the injured party to proceed against the insurer;
• Subrogation allows the paying insurer to proceed against the responsible person.

Can a Subrogated Insurer Use an Arbitration Clause?

This question requires careful analysis.

Subrogation transfers the insured’s substantive claim up to the payment made. It does not create a new agreement by the responsible party to arbitrate.

Where the insured’s claim arises from a contract containing a valid arbitration clause, the insurer may argue that it acquired the contractual claim together with the dispute-resolution mechanism connected to that claim.

The answer may depend on:

• The law governing subrogation;
• The law governing the arbitration agreement;
• The wording and scope of the clause;
• The nature of the underlying claim;
• Whether the insured could have commenced arbitration;
• Whether the insurer’s claim is contractual or statutory.

Where the responsible third party never consented to arbitration and the subrogated claim is purely tortious, the insurer cannot establish arbitral jurisdiction merely by making an insurance payment.

A subrogated insurer commencing arbitration should submit:

• The insurance policy;
• Proof of the insured loss;
• Payment records;
• Evidence of the responsible party’s liability;
• The underlying contract;
• The arbitration agreement;
• The legal basis for succession to the arbitration right.

Subrogation and Partial Payments

Where the insurer pays only part of the loss, both the insurer and insured may retain claims against the responsible party.

This may create:

• Parallel proceedings;
• Competition over recoveries;
• Settlement conflicts;
• Limitation-period risks;
• Double-recovery concerns;
• Questions about priority.

The insured and insurer should coordinate their claims through a written agreement.

They may agree to:

• Bring one arbitration jointly;
• Appoint one party to control proceedings;
• Share costs;
• Allocate recoveries;
• Require mutual settlement consent;
• Protect uninsured losses.

The responsible party should not be required to pay more than the total legally recoverable loss.

Subrogation versus Contractual Recourse

Subrogation is derived from the insured’s existing right against the responsible party.

A contractual or statutory recourse claim may arise independently.

Examples include:

• An insurer’s claim against another insurer;
• A liability insurer’s recourse against the insured under compulsory-insurance rules;
• Contribution among co-insurers;
• A reinsurer’s contractual recovery;
• A guarantee provider’s reimbursement claim.

The distinction affects:

• Standing;
• Defences;
• Limitation periods;
• Arbitration jurisdiction;
• Measure of recovery.

Pleadings should identify whether the claim is based on subrogation, contribution, reimbursement or an independent contractual promise.

Evidence in Insurance Arbitration

Insurance disputes are heavily dependent on documentary and expert evidence.

Relevant documents may include:

• Policy and endorsements;
• Proposal forms;
• Underwriting files;
• Broker correspondence;
• Risk surveys;
• Premium records;
• Claims notices;
• Survey reports;
• Repair invoices;
• Accounting records;
• Expert reports;
• Settlement agreements;
• Reinsurance slips;
• Bordereaux;
• Claims-control correspondence;
• Proof of subrogation payment.

Electronic evidence may include emails, system logs, photographs, video, sensor data and metadata.

The parties should preserve evidence as soon as a loss or coverage dispute becomes foreseeable.

Insurance Experts, Adjusters and Actuaries

Expert evidence may be necessary concerning:

• Cause of loss;
• Property valuation;
• Repair cost;
• Business interruption;
• Disability;
• Medical causation;
• Reserving;
• Aggregation;
• Reinsurance allocation;
• Premium calculation.

An insurance adjuster’s report may be important but is not automatically binding on the tribunal unless the parties agreed to final expert determination.

The tribunal must evaluate:

• Independence;
• Methodology;
• Instructions;
• Documents reviewed;
• Assumptions;
• Alternative calculations.

Legal interpretation of the policy remains the tribunal’s responsibility.

Confidentiality and Protected Information

Insurance arbitration may involve sensitive information such as:

• Medical records;
• Customer information;
• Trade secrets;
• Cybersecurity data;
• Claims reserves;
• Reinsurance pricing;
• Settlement communications;
• Personal financial information.

A confidentiality and data-protection protocol may regulate:

• Redaction;
• Restricted access;
• Data rooms;
• Cross-border transfers;
• Use of experts;
• Hearing attendance;
• Destruction or return of records.

In reinsurance disputes, the cedent should also assess whether production of underlying policyholder records is permitted and necessary.

Interim Measures

Urgent interim protection may be necessary to:

• Preserve damaged property;
• Prevent destruction of evidence;
• Protect subrogation rights;
• Freeze settlement funds;
• Preserve accounting records;
• Prevent disclosure of confidential underwriting data;
• Secure an indemnity claim.

Under International Arbitration Law No. 4686, requesting an interim injunction or attachment from a Turkish court before or during arbitration does not violate the arbitration agreement.

The tribunal may also grant interim relief unless otherwise agreed. However, it cannot directly issue measures requiring compulsory enforcement by state authorities or binding third parties. Court assistance may therefore be necessary.

For example, a tribunal may order a signatory not to dispose of a recovery. A Turkish court order will generally be required to freeze a bank account held by a non-party bank.

Governing Law in International Insurance and Reinsurance

An international policy may involve several potentially applicable laws:

• Law governing the insurance contract;
• Law governing the arbitration agreement;
• Procedural law of the seat;
• Mandatory insurance regulation;
• Law governing the insured risk;
• Law governing subrogation;
• Law of enforcement.

The governing-law clause should be explicit.

A policy covering assets in several countries may also contain territorial clauses, local-policy requirements and master-policy arrangements.

A tribunal should distinguish contractual choice of law from mandatory regulatory rules applicable to insurance activities in Turkey.

Drafting an Insurance Arbitration Clause

A commercial insurance arbitration clause should identify:

• Institution or ad hoc rules;
• Legal seat;
• Language;
• Number of arbitrators;
• Governing law;
• Law governing the arbitration agreement;
• Scope of covered disputes;
• Interim-relief rights;
• Confidentiality;
• Consolidation;
• Expert determination;
• Appointment qualifications.

The clause should cover disputes concerning:

• Policy existence;
• Validity;
• Interpretation;
• Coverage;
• Exclusions;
• Indemnity;
• Premiums;
• Subrogation;
• Contribution;
• Termination;
• Settlement.

Sample Commercial Insurance Arbitration Clause

“Any dispute, controversy or claim arising out of or relating to this Policy, including its formation, existence, validity, interpretation, coverage, exclusions, premium, notification, indemnity, valuation, subrogation, contribution, termination or enforcement, shall be finally resolved by arbitration administered by the Istanbul Arbitration Centre in accordance with the ISTAC Arbitration Rules.

The seat of arbitration shall be Istanbul, Türkiye. The tribunal shall consist of three arbitrators. The language of arbitration shall be English. This Policy and the arbitration agreement contained in this clause shall be governed by Turkish law.

The tribunal may appoint insurance, actuarial, accounting, engineering, medical or other experts where necessary. Nothing in this clause prevents a party from applying to an emergency arbitrator or competent court for interim, conservatory or protective relief.

This clause does not restrict any mandatory right to apply to the Insurance Arbitration Commission where that statutory mechanism is applicable and cannot validly be excluded.”

The final sentence should be adapted after analysing whether the policyholder is a commercial enterprise or a consumer and whether mandatory statutory rights apply.

Sample Reinsurance Arbitration Clause

“Any dispute arising out of or relating to this Reinsurance Agreement, including its formation, validity, attachment, interpretation, coverage, aggregation, allocation, premium, retention, claims notification, claims cooperation, claims control, settlement, commutation or termination, shall be finally resolved by arbitration administered by the Istanbul Arbitration Centre under the ISTAC Arbitration Rules.

The seat shall be Istanbul, Türkiye. The tribunal shall consist of three arbitrators with substantial experience in insurance or reinsurance. The language shall be English. The substantive law of this Agreement and the arbitration agreement shall be Turkish law.

The tribunal may consolidate related disputes or conduct coordinated proceedings only to the extent permitted by the applicable Rules and the arbitration agreements concerned. The proceedings, submissions, evidence and award shall remain confidential, subject to disclosures required by law, regulation or enforcement.”

Setting Aside Turkish-Seated Awards

A Turkish-seated international award is not subject to an ordinary appeal on the merits.

It may be challenged only on the limited grounds established by International Arbitration Law No. 4686, including:

• Invalid arbitration agreement;
• Irregular tribunal constitution;
• Excess of jurisdiction;
• Serious procedural violation;
• Denial of equality;
• Non-arbitrability;
• Conflict with public policy.

An application to set aside must be distinguished from a request to reconsider the tribunal’s interpretation of the policy or calculation of the loss. The setting-aside court does not ordinarily rehear the coverage dispute merely because one party disagrees with the award.

Recognition and Enforcement of Foreign Awards in Turkey

A foreign insurance or reinsurance award may be recognised and enforced in Turkey under the New York Convention and Law No. 5718.

Article 60 of Law No. 5718 permits enforcement of foreign arbitral awards that are final, enforceable or binding on the parties. The applicant must provide the arbitration agreement, award and certified translations.

Enforcement may be refused on limited grounds, including:

• Absence or invalidity of the arbitration agreement;
• Lack of proper notice;
• Denial of an opportunity to present the case;
• Improper tribunal constitution;
• Excess of jurisdiction;
• Non-arbitrability;
• Public-policy conflict;
• Award not being binding or having been set aside.

The New York Convention’s principal purpose is to prevent discrimination against foreign and non-domestic arbitral awards and to establish a common enforcement framework among contracting states.

Practical Checklist for Insurance Claims

Before commencing an insurance arbitration, the claimant should determine:

• Which dispute-resolution mechanism applies;
• Whether the Commission, commercial arbitration or court has jurisdiction;
• Whether the insurer is a Commission member;
• Whether prior written application is required;
• Which policy documents form the contract;
• Which general conditions apply;
• Whether the loss occurred within the policy period;
• Whether an exclusion applies;
• Whether notification was timely;
• Whether the risk was aggravated;
• How the loss is calculated;
• Whether another insurer covers the same loss;
• Whether subrogation rights exist;
• Whether interim protection is needed;
• Where the award will be enforced.

Practical Checklist for Reinsurance Disputes

A cedent or reinsurer should review:

• Treaty or facultative wording;
• Underlying policy;
• Period of attachment;
• Definition of occurrence;
• Aggregation;
• Retention;
• Limits;
• Claims-control provisions;
• Notice requirements;
• Settlement authority;
• Bordereaux;
• Premiums;
• Reinstatements;
• Currency;
• Arbitration clause;
• Governing law;
• Evidence and confidentiality;
• Related retrocession arrangements.

Frequently Asked Questions

Can insurance disputes be arbitrated in Turkey?

Yes. Private contractual disputes concerning policy coverage, indemnity, premiums, liability and subrogation are generally suitable for arbitration where a valid arbitration agreement or statutory insurance-arbitration mechanism applies.

What is the Insurance Arbitration Commission?

It is a specialised statutory mechanism established under Article 30 of Insurance Law No. 5684 for qualifying disputes arising from insurance contracts.

Must the claimant apply to the insurer first?

Yes. The Commission’s official guidance requires a prior written application to the relevant insurance organisation.

Can the same dispute be brought before the Commission and a court?

The Commission does not accept disputes already referred to a court, consumer arbitration committee or arbitration under the Code of Civil Procedure.

Can a reinsurance dispute be brought before the Insurance Arbitration Commission?

Ordinarily, no. Reinsurance is a separate contract between the insurer and reinsurer, and the policyholder does not receive a direct claim against the reinsurer merely because reinsurance exists.

Can reinsurance disputes be resolved by ISTAC?

Yes. Insurers and reinsurers may include a valid ISTAC arbitration clause in their reinsurance agreement.

When does insurance indemnity become due?

Under the general Turkish Commercial Code rule, indemnity becomes due after the relevant documents are delivered and the insurer completes its investigation, subject to the statutory maximum periods and branch-specific rules.

Can the insured recover more than the actual loss?

Generally, no. Property insurance is governed by the indemnity principle and the insurer’s responsibility is limited by both the actual loss and the insured amount.

What happens in underinsurance?

Unless otherwise agreed, partial losses may be reduced proportionally according to the ratio between the insured amount and actual insurance value.

Can the injured person claim directly from a liability insurer?

Article 1478 gives the injured person a direct statutory claim against the liability insurer up to the insured amount, subject to the applicable limitation period.

What is subrogation?

After paying indemnity, the insurer succeeds to the insured’s rights against the responsible person up to the amount paid.

Does subrogation automatically create arbitration jurisdiction?

No. The insurer must establish that the responsible party is bound by an arbitration agreement covering the subrogated claim.

Can an insurer seek contribution from another insurer?

Yes, where several insurers cover the same interest and the applicable legal and contractual conditions for contribution are satisfied.

Can the tribunal freeze assets in Turkey?

The tribunal may grant interim relief between the parties, but it cannot directly bind third parties or use state enforcement powers. A Turkish court order may be necessary.

Can a foreign insurance award be enforced in Turkey?

Yes, subject to the New York Convention, Law No. 5718 and the limited statutory refusal grounds.

Conclusion

Insurance and reinsurance arbitration in Turkey requires a clear distinction between statutory insurance arbitration and commercial arbitration.

The Insurance Arbitration Commission offers a specialised procedure for qualifying disputes between insured persons, policyholders, beneficiaries and insurance organisations. It is generally document-based, requires a prior written claim to the insurer and operates under the framework of Insurance Law No. 5684.

Large corporate insurance and reinsurance disputes may instead be resolved through ISTAC, another arbitral institution or ad hoc arbitration.

Coverage disputes require detailed interpretation of the policy, proposal, endorsements, general conditions and underwriting information. The tribunal must examine the insured risk, policy period, exclusions, notification duties and causation.

Indemnity disputes require a separate financial analysis.

The insured must establish the existence and amount of the actual loss. Underinsurance, overinsurance, agreed value, co-insurance, deductibles, sublimits and business-interruption calculations may materially affect the amount payable.

Liability insurance creates further issues concerning defence costs, settlement control and the injured party’s direct claim against the insurer.

Subrogation becomes relevant after payment.

The paying insurer succeeds to the insured’s rights against responsible parties up to the amount paid. However, the insurer must still establish that any arbitration agreement covers the subrogated claim. Payment does not create consent to arbitration where none previously existed.

Reinsurance remains legally separate from the underlying policy.

The cedent remains responsible to the policyholder, while the reinsurer’s obligation is determined by the reinsurance contract. Policyholders do not obtain a direct claim against the reinsurer merely because the risk was reinsured.

Reinsurance agreements should therefore contain detailed provisions concerning aggregation, notification, claims cooperation, claims control, settlements, premiums, retentions and dispute resolution.

The arbitration clause should identify the institution, seat, language, number of arbitrators and governing law. Related policies, layers, co-insurance arrangements and retrocessions should use compatible clauses where coordinated proceedings may become necessary.

When a dispute arises, early preservation of underwriting files, claims records, expert reports, payment evidence and subrogation documents is essential.

A carefully managed arbitration can provide specialist decision-makers, confidentiality and an internationally enforceable result while protecting the contractual and statutory rights of insurers, reinsurers and policyholders.

Legal Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Insurance and reinsurance disputes depend on the policy wording, general and special conditions, insurance branch, parties, governing law, arbitral seat, mandatory regulation and intended enforcement jurisdiction. Case-specific Turkish legal advice should be obtained before commencing Insurance Arbitration Commission, institutional arbitration or court proceedings.