11th Chamber 2001/2549 E. , 2005/183 K.
“Case Law Text”
T.C.
CONCİL OF STATE
ELEVENTH CHAMBER
Esas No: 2001/2549
Decision No: 2005/183
Plaintiff : …
Defendant : Republic of Turkey Prime Ministry Undersecretariat of Treasury-ANKARA
Defendant Summary : The plaintiff claims that the General Conditions of Compulsory Earthquake Insurance issued pursuant to the Decree Law No. 587 on Compulsory Earthquake Insurance issued on the basis of the authorisation law numbered 4452, and the staffing chart of the Natural Disaster Insurance Institution established by the same Decree, and the compulsory earthquake insurance application are unlawful and are requested to be cancelled.
Summary of Defence The legal basis of the compulsory earthquake insurance is the Decree Law No. 587 on Compulsory Earthquake Insurance issued based on the Authorisation Law No. 4452 on the Measures to be Taken Against Natural Disasters and the Arrangements to be Made for the Elimination of Losses Caused by Natural Disasters, and the General Conditions of Compulsory Earthquake Insurance subject to the lawsuit are issued based on Article 10 of this Decree Law. Article 10 of this Decree Law, the Natural Catastrophe Insurance Institution was established by the said Decree Law, the Board of Directors of the Institution, the management and duties of the Board are also specified in the Decree Law, Since the country is located on an active earthquake zone and a large part of the country faces the risk of earthquake, it is argued that it is aimed to take necessary measures such as ensuring a balanced distribution of the risk to the society and distributing the financial burden of the earthquake to international capital and capital markets in the face of the fact that it is clear that great material and moral damages that are difficult to meet will occur in the event of the realisation of the risk, that there is no personnel and staff chart of this Institution, that the application is in accordance with the law, and that the lawsuit, which lacks legal basis, should be rejected.
Council of State Examining Judge : …
Opinion : The lawsuit was filed for the cancellation of the General Conditions of Compulsory Earthquake Insurance, the staff list of the Natural Disaster Insurance Institution and the compulsory earthquake insurance practice.
Considering the provisions of the Decree Law No. 587 on Compulsory Earthquake Insurance issued pursuant to the authorisation law No. 4452, there is no contradiction to the law in the General Conditions of Compulsory Earthquake Insurance and the implementation of compulsory earthquake insurance issued on the basis of this decree.
As for the request for the cancellation of the staff list of the Natural Disaster Insurance Institution; there is no staff list of the institution in question. Therefore, it is not possible to decide on this request
For the reasons explained, it is considered that the part of the case related to the General Conditions of Compulsory Earthquake Insurance and the compulsory earthquake insurance application should be rejected, and that there is no need to decide on the part related to the staffing chart of the Natural Disaster Insurance Institution.
Council of State Prosecutor : …
Opinion : The lawsuit was filed with the request for the cancellation of the General Conditions of Compulsory Earthquake Insurance, which was published by the Undersecretariat of Treasury in the Official Gazette dated 8.9.2000 and dated 27.9.2000 and entered into force on 27.9.2000, the staff roster of the Natural Disaster Insurance Institution and the compulsory earthquake insurance application.
As a result of the examination of the case file, it is understood that the General Terms and Conditions of Compulsory Earthquake Insurance, which entered into force after being published in the Official Gazette dated 8.9.2000 and numbered 24164 by the Undersecretariat of Treasury, was issued in accordance with the Decree Law No. 587 on Compulsory Earthquake Insurance, which was prepared on the basis of the Authorisation Law No. 4452 on the Measures to be Taken Against Natural Disasters and the Arrangements to be Made for the Elimination of Losses Caused by Natural Disasters.
Due to the fact that our country is located in an earthquake zone and the earthquake disasters experienced on 17 August and 12 November 1999 covered a very large geographical area and thousands of buildings were lost or damaged, the Natural Catastrophe Insurance Institution was established due to the difficulty in meeting the emergency shelter needs of the disaster victims in a timely manner with the existing facilities, and a very small amount such as 20 billion Turkish Liras of the value of independent sections or buildings was included in the scope of compulsory earthquake insurance by this institution, and a limited protection was provided in this amount, and for the part exceeding this amount, the way to have voluntary insurance was opened, and the compulsory earthquake insurance activity of the said institution, It is concluded that the insurance companies operating in the free market do not prevent the insurance activities, even the insurance policies are issued through these companies in return for a certain amount, commercial and industrial facilities are not included in the scope of compulsory earthquake insurance and the facilities that carry the main risk are kept within the optional insurance system, thus showing the importance given by the state to earthquake insurance and directing the building owners to have voluntary earthquake insurance, and the amount of risk assumed by the insurance companies in similar natural disasters is reduced and the activities of the insurance companies in free market conditions are strengthened. The Natural Catastrophe Insurance Institution has not been completely excluded from the supervision as claimed by the plaintiff, and it has been stipulated that it will be supervised by the Undersecretariat of Treasury with the aforementioned Decree Law. Therefore, it is not possible to misuse the savings provided to cover the compulsory earthquake risk.
In this case, there is no violation of law in the General Conditions of Compulsory Earthquake Insurance subject to the lawsuit and in the implementation of compulsory earthquake insurance
As for the part of the case related to the staff list of the Natural Disaster Insurance Institution;
The Natural Catastrophe Insurance Institution was established by Article 4 of the Decree Law No. 587, and Articles 5, 6, 7 and 8 include regulations related to this institution. However, the staff list for this institution has not been issued. Therefore, it is not possible to decide on this request.
For the reasons explained, it is considered that the part of the lawsuit regarding the General Conditions of Compulsory Earthquake Insurance and Compulsory earthquake insurance application should be rejected, and it is considered that there is no place to decide on the part regarding the staffing chart of the Natural Disaster Insurance Institution.
ON BEHALF OF THE TURKISH NATION
The Eleventh Chamber of the Council of State discussed the necessity of the case:
The lawsuit was filed for the cancellation of the General Conditions of Compulsory Earthquake Insurance issued by the Prime Ministry Undersecretariat of Treasury pursuant to the Decree Law No. 587 issued on the basis of the Authorisation Law No. 4452, the staff roster of the Natural Disaster Insurance Institution and the compulsory earthquake insurance practice.
Article 1 of the Law No. 4452 on the Authorisation Law on the Measures to be taken against Natural Disasters and the Arrangements to be made for the Relief of the Damages caused by Natural Disasters Article 1 states that the purpose of this law is to determine the measures to be taken against natural disasters, to eliminate the damages arising from these disasters, to establish new settlement areas, procurement, contracting, consultancy services and protection of cultural and natural assets, civil defence, operation of existing funds and establishment of additional funds when necessary, to authorise the Council of Ministers for the effective use of all kinds of donations and aids, regulation on economic issues, establishment of an insurance system to cover the damages arising from natural disasters, establishment of new municipalities in natural disaster areas and amendments to be made in the organisation laws, and to authorise the Council of Ministers exclusively in urgent and compulsory cases.
Article 1 of the Decree Law No. 587 on Compulsory Earthquake Insurance enacted on the basis of the Authorisation Law No. 4452 stipulates that the purpose of this Decree Law is to determine the procedures and principles regarding the compulsory earthquake insurance of the building owners or usufructuary right holders in order to cover the material damages they will suffer due to the loss or damage of their buildings as a result of the earthquake disaster, and Article 4 of the same Decree Law stipulates that the Natural Disaster Insurance Institution, which is a public legal entity, has been established under the Ministry in order to provide insurance and fulfil other duties assigned to it by this Decree Law. Article 4 of the same Decree stipulates that the Natural Catastrophe Insurance Institution with public legal personality was established under the Ministry in order to provide insurance and fulfil other duties assigned to it by this Decree Law, and Article 10 titled “Insurance coverage tariffs and instructions, commissions” stipulates that Article 10 titled “Insurance coverage, tariffs and instructions, commissions” stipulates that the amount of coverage for compulsory insurance, general conditions, tariffs and instructions, procedures and principles of payment of premiums and commissions to be paid to the institution administrator and authorised insurance companies shall be determined by the Ministry and published in the Official Gazette, and in the determination of insurance premiums, the area of the building, construction class and quality, geological characteristics of the land on which the building is located, earthquake risk and similar factors shall be taken into consideration.
The plaintiff claims that the compulsory earthquake insurance is an illegal and unilateral application, that not all buildings are covered by the insurance, that the insurance is provided for buildings with a value up to twenty billion liras and that no coverage is provided for the goods inside the buildings, that the insurance premium is received in advance, whereas private insurances receive coverage from customers according to demand and that they collect part of the insurance premium in advance and the rest in instalments, In the compulsory earthquake insurance, if there is not enough money in the pool, it is stated that the existing money will be shared among the damaged, whereas private insurance companies are obliged to pay the entire damage to each policy separately, and it is envisaged that private insurance companies can be insured for the part exceeding twenty billion liras and for the goods secured by the compulsory earthquake insurance, 12.5 per cent commission given to insurance agencies in return for compulsory earthquake insurance is not sufficient due to tax and general expenses, for this reason many private insurance agencies do not issue compulsory earthquake insurance policies, compulsory earthquake insurance has been made compulsory for transactions in land registry offices by decree, there is no need for Natural Disaster Insurance Institution because the State has insurance companies, It is claimed that this institution has been removed from the audit of the Court of Accounts, that this shows that the money collected to cover the earthquake risk will not be used in accordance with its purpose, and that it is not against compulsory earthquake insurance but against the practice, and it is requested to cancel the General Conditions of Compulsory Earthquake Insurance, the staffing chart of the Natural Disaster Insurance Institution and the compulsory earthquake insurance practice.
Since our country, which is located on an active earthquake zone, faces an earthquake risk, there is no doubt that major losses will occur in earthquakes. Considering the fact that private insurance companies may refrain from providing coverage in regions with high earthquake risk due to the fact that they lack the financial power to carry out a comprehensive programme throughout the country as of their current situation, that insurance awareness is not sufficiently established in the society, that only those living in regions with high earthquake risk have insurance, and that although there is voluntary earthquake insurance, only a very small portion of the total dwellings are insured, it becomes necessary to make a new structuring in the form of a publicly supported or direct public institution in order to meet the financing need arising from major disasters and to do this by ensuring the participation of a wide segment of the society.
With the Decree Law No. 587 on Compulsory Earthquake Insurance, which was enacted based on the Authorisation Law No. 4452 in order to provide the necessary financing to meet the risk in question, the Natural Catastrophe Insurance Institution was established to provide compulsory earthquake insurance that covers the damages caused directly or indirectly by the earthquake up to the amount determined in accordance with Article 10 and to fulfil the duties assigned by this Decree Law.
The General Terms and Conditions of the Compulsory Earthquake Insurance to be cancelled were issued by the Prime Ministry Undersecretariat of Treasury pursuant to Article 10 of the said Decree Law and published in the Official Gazette dated 8.9.2000 and numbered 24164 and entered into force on 27.9.2000.
Since it has been concluded from the examination of the General Terms and Conditions of Compulsory Earthquake Insurance that they are in conformity with the Decree Law No. 587, public interest and service requirements, there is no violation of law in this regulation.
As for the part of the case related to the request for cancellation of the staff list of the Natural Disaster Insurance Institution;
The Natural Catastrophe Insurance Institution was established by Article 4 of the Decree Law No. 587, and Article 6 of the same Decree states that the institution will be managed by the Board of Directors, and that the technical works of the institution will be assigned to an insurance or reinsurance company by the Undersecretariat to be carried out by the Undersecretariat with a contract as the administrator of the Institution, Article 7 explains who the members of the Board will consist of, how they will be appointed, their term of office and how their remuneration will be paid, and Article 8 lists the duties of the Board, but does not regulate the staff list. Pursuant to Article 6, the respondent administration stated that it was agreed that the technical works of the Board would be carried out by the aforementioned company with the agreement made between them and Milli Reasürans T.A.Ş. For this reason, it is not possible to examine the request for cancellation of the staff list of the said Institution, which does not have a staff and staff list.
As for the part of the case regarding the implementation of compulsory earthquake insurance;
Since the compulsory earthquake insurance, which was established for the reasons explained above and which necessitates public intervention in earthquake insurance, has a unique structure, it is natural that it has a different legislation from other insurance companies operating under the Insurance Supervision Law.
Compulsory earthquake insurance has been introduced for the independent sections within the scope of the Condominium Law No. 634, buildings constructed as dwellings on immovable properties registered to the title deed and subject to private ownership, independent sections used for commercial, office and similar purposes within these buildings, and dwellings built by the State due to natural disasters or built with the loan given, and the buildings belonging to public institutions and organisations, buildings constructed in village settlement areas and the goods inside the buildings included in the scope of compulsory earthquake insurance are excluded from the scope of insurance. In Article 2 of the Compulsory Earthquake Insurance Tariff and Instruction issued on the basis of the aforementioned Decree Law and published in the Official Gazette dated 8.9.2000 and numbered 24164 and entered into force on 27.9.2000, the maximum amount of coverage that can be provided for a dwelling within the scope of compulsory earthquake insurance is determined as 20 billion liras for all building types. From Articles 6, 7 and 8, it is understood that persons and institutions other than the Natural Catastrophe Insurance Institution cannot carry out compulsory earthquake insurance, but this insurance can be carried out by authorised insurance companies and their agencies on behalf and account of the Natural Catastrophe Insurance Institution, they will collect the premium amounts in advance and a commission of 12.5% of the earthquake insurance premium amount will be paid to them, and voluntary earthquake insurance can be provided by insurance companies for the part above this coverage amount, provided that compulsory earthquake insurance has been carried out. With these regulations, the structures subject to compulsory earthquake insurance and the amount to be covered are limited, and the earthquake insurance of the part exceeding this amount and the earthquake insurance of the structures excluded from compulsory earthquake insurance are left to private insurance companies, and it is foreseen that a commission will be paid at the rate of a certain amount of the insurance premium in return for the compulsory earthquake insurance policies they will issue to the authorised insurance companies. According to the figures stated by the respondent administration in the file numbered E:2001/2549 of our Chamber, it is understood that 1.470.109 of the 1.811.023 compulsory earthquake insurance policies issued until 27.4.2001 were issued by private insurance companies, and it is concluded that the amount of commission paid to private insurance companies issuing compulsory earthquake insurance policies is sufficient. In this case, it is not possible to mention that private insurance companies have been completely disabled regarding earthquake insurance.
In order to ensure the success of the compulsory earthquake insurance implementation, Article 9 of the Decree No. 587 introduced the obligation to have compulsory earthquake insurance for the buildings and independent sections falling within the scope of the decree, and Article 12 stipulates that public institutions and organisations will not be able to carry out any transactions, including title deed registration procedures, in the event that the buildings falling within the scope of this insurance do not have compulsory earthquake insurance and the premium is not paid, with the aim of ensuring that the building owners or usufructuaries have this insurance. Article 17 of the same decree stipulates that in the event that the insured loss is higher than expected and exceeds the resources of the institution, the resulting loss will be covered within the ratio of the sum of the institution’s resources and the amount of protection to the total compensation that should be paid within the scope of compulsory insurance, in order to ensure a balanced distribution of the assets of the institution to the insured in case the resources of the institution are exceptionally insufficient. Moreover, the Turkish Catastrophe Insurance Pool has reinsurance agreements with international reinsurance companies to insure the risks that are not financially feasible to be undertaken alone.
The Natural Disaster Insurance Institution, which was established to provide compulsory earthquake insurance and to fulfil the duties assigned by the Decree Law on Compulsory Earthquake Insurance, is excluded from the audit of the Court of Accounts, but the annual accounts, transactions and expenditures of the institution will be audited by the Undersecretariat of Treasury, the duties of the Board of Directors that will manage the institution and the places where the resources of the institution will be used are determined by the said Decree Law. For this reason, since it is not possible to misuse the money collected to cover the earthquake risk in the compulsory earthquake insurance, the allegations put forward by the plaintiff have no legal merit.
In this case, there is no contradiction to the public interest, service requirements and the law in the implementation of this insurance with the General Conditions of Compulsory Earthquake Insurance issued pursuant to the Decree Law No. 587 issued on the basis of the Authorisation Law regarding the compulsory earthquake insurance, which was established by the State based on the sovereignty power in order to cover the earthquake risk and to ensure this with the participation of the whole society, does not aim for profit and eliminates the obligations of the State arising from the Law No. 7269 after the earthquakes that may occur.
For the reasons explained above, it was unanimously decided on 14.1.2005 that the lawsuit be dismissed and the judgement expenses be left on the plaintiff.
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