Insurance law provides assurance against the risks identified by the parties to an insurance policy. Accordingly, insurance policies must comply with critical regulations that aim to achieve a balance between the parties and prevent information asymmetry. As a cornerstone of a policy, the duty to inform requires the insurer to inform the policyholder about the content of the policy, the sum insured, and the risks and the terms of the policy.
The duty to inform under insurance law first emerged in English law with the principle of "utmost good faith," or uberrimae fidei in Latin. The principle of "utmost good faith" is a minimum standard that legally obligates all parties to a contract to act honestly and avoid withholding critical information from or misleading each other. It was adopted to prevent information asymmetry between the parties in insurance policies, and the English courts started to exercise this principle in the early 18th century. The principle increases the credibility of insurance policies and the parties' trust in each other.
The duty to inform is a fundamental principle that ensures fair and balanced protection of the policyholder as per insurance law. It is regulated by the existing legislation and is valuable for transparency and integrity in the insurance sector.
Under Turkish Law, the duty to inform is stipulated in article 1423 of Turkish Commercial Code no. 6102 ("TTK") and article 11 of Insurance Law no. 5684 ("SK"). Article 1423 of the TTK requires the insurer to inform the policyholder in writing prior to the conclusion of the policy. The information to be given includes the sum insured, premiums, and the covered and uncovered risks. Issues not specified in this article, relating to the performance of the duty and the consequences of non-performance, are set forth in the Regulation on the Provision of Information about Insurance Policies ("SSBIY").
Informing the applicant about the terms of the policy is necessary for them to make the right decision. The insurer should fulfill this duty by giving sufficient time to the applicant for reflection and inquiry. In the event of a breach of the duty to inform, the policyholder has the right to rescind or terminate the policy. The TTK and SSBIY stipulate the exercise of these rights and the applicable penalties in case of a breach. Moreover, article 49/2 of Law no. 6502 on Consumer Protection ("TKHK") sets forth how the duty to inform is fulfilled if the policy is concluded electronically.
In short, the duty to inform is a fundamental principle under insurance law, aiming to protect the policyholder and ensure fair and balanced conclusion of insurance policies. The duty should be duly performed in order to ascertain the correct interpretation of insurance policies and promote transparency and integrity in the sector.
Originally published on Sep 6, 2024
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