On October 1, 2014, the Turkish Undersecretariat of the Treasury added surety insurance (kefalet sigortası) as a permitted type of non-life insurance in Turkey, amending its earlier 2007 Communiqué on Types of Insurance (No. 2007/1).
The Treasury first introduced surety insurance in February in an announcement setting the general terms and conditions of this new form of insurance in Turkey. Since then, insurance companies have been permitted to provide surety insurance under employee fidelity insurance. Now that this type of insurance has been added to the Communiqué, insurance companies need a separate license from the Treasury to offer it in the Turkish market.
Surety insurance is expected to replace performance bonds and bid bonds, frequently used in public tenders once Turkey's public tender regulations are amended to allow public authorities to accept this form of insurance as security.
The amendment also removes employee fidelity insurance from the list of approved types of individual non-life insurance. As a result, this type of insurance no longer requires a separate license. Turkish insurers are, nevertheless, able to offer this product under a joint license obtained for credit insurance and employee fidelity insurance.