Underwriters at Lloyd’s of London (“Lloyd’s”) have engaged in discussions with the Turkish government to discuss Lloyd’s entry into Turkey.
During “Vision 2025” in May 2012, David Cameron highlighted that Lloyd’s was keen to expand its presence in Turkey by establishing Lloyd’s Turkey. This would be a local operation based in Istanbul Financial Centre and subject to Turkish supervision that would enable the Lloyd’s market to provide local insurance and reinsurance solutions to Turkish clients.
The Turkish market is currently dominated by Turkish-based insurance companies. The top 3 companies (Axa Turkey, Anadolu Sigorta and Ak Sigorta) thus play an important role in the market.
Although there are certain exceptions, Lloyd’s underwriters are not permitted to write insurance in, or from, Turkey under Turkish insurance legislation.
Similarly, as regards reinsurance, Lloyd’s underwriters are only permitted to write reinsurance originating from Turkey on a cross-border basis. The underwriting must take place outside of the territory. The cover holder model is not recognized in Turkey.
Pursuant to the Turkish insurance legislation, insurance companies must be established as joint stock companies or cooperatives and meet certain capital requirements. Foreign insurance companies, including Lloyd’s, can only establish a branch in Turkey. In addition, Turkish legislation does not currently recognise the concept of syndicates and managing general agents as they exist in the Lloyd’s model.
As such, certain changes would be required to the current legislation before Lloyd’s could expand into Turkey. Specifically, the current status of foreign insurance companies could only be changed by the enactment of a council of ministers’ decree with respect to establishing an office in Turkey. Further, any proposed legislation that comes out of Lloyd’s discussions with the Turkish government would have to recognise Lloyd’s legal form and propose an operating model in Turkey.