The Turkish Ministry of Justice plans to overhaul the insurance dispute resolution process by making mediation mandatory for insurance claims before they are brought before the Insurance Arbitration Commission (IAC).
Under a proposed amendment to the Insurance Law, applications made directly to the IAC without first attempting mediation will be deemed invalid and rejected outright, reported the news media Haberturk.
The rationale for mediation is to reduce the number of cases sent to the IAC. Expectations are that half of all insurance disputes will be resolved through mediation. The mediation process is to be completed within a maximum period of 28 days. Under the new system, insurance companies will primarily cover the mediation costs. However, if the mediation decision goes against the insured, this cost will be borne by the insured.
According to the Ministry, pre-arbitration mediation is a model compatible with global practices and promotes amicable settlements.
The IAC was established with the enactment of the Insurance Act in 2007. The main objective of the IAC is to fast-track the resolution of insurance disputes. The number of applications to the IAC has grown quickly over the years due to wider recognition of the scheme and the growth of the insurance market.
However, IAC arbitrators and some industry representatives object to the proposed regulation. Experts warn that this could both prolong the time it takes for citizens to seek legal action and create additional costs. While disputes are currently resolved within an average of 3-6 months, the mandatory mediation process could extend the timeline to 8-11 months, they argue.