Category: Turkiye

Law on the Amendment of the Law on the Regulation of Tobacco, Tobacco Products and Alcohol Market and Certain Laws No. 7423 (the “Omnibus Bill”), which was submitted to the Grand National Assembly of Turkey on October 18, 2022 was legalized and published in the Official Gazette dated December 10, 2022 and numbered 32039. Some of the amendments in the Omnibus Bill entered into force on the date of its publication; while other amendments will enter into force on January 1, 2024.

The Omnibus Bill amended the:
Tax Procedure Law No. 213 (the “TPL”);
Special Consumption Tax Law No. 4760 (the “SCT Law”);
Law on Regulation of Tobacco, Tobacco Products and Alcohol Market No. 4733 (the “Tobacco and Alcohol Law”);
Anti-Smuggling Law No. 5607 (the “Anti-Smuggling Law”);
Electronic Communication Law No. 5809.

What is the Purpose of the Omnibus Bill?
The Omnibus Bill aims to prevent (i) tax evasion and unfair competition; (ii) the supply of non-standard and poor-quality products to the market, and (iii) market-entry of the products that endanger the environmental and public health due to production conditions and the substances they contain, in case of tobacco, tobacco products and alcohol are being subject to smuggling.

What Does the Omnibus Bill Bring?
The regulations introduced by the Omnibus Bill are categorized under 5 (five) main headings. These headings and relevant regulations are as follows:

Regulations on the Special Labels and Markings
In the markets regulated by the Tobacco and Alcohol Law, regardless of whether they are authorized by the Ministry of Treasury and Finance (the “Ministry”); an imprisonment of 3 (three) to 8 (eight) years is envisaged for those who prevent the transmission of documents, information or data required to be transmitted to the Ministry electronically by intervening Product Monitoring System (the “PMS”), which enables the labelling and marking of products with special labels and signs that are obligatory to be used to ensure tax security, and the transfer of labelled or marked product information to the established data center, physically or through informatics or those who cause them to be transmitted in a non-realistic manner. Stamps, barcodes, holograms, clippings, seals, and symbols are among such special labels and marks. According to the preamble of the Omnibus Bill, it is aimed to prevent unregistered production by criminalizing unlawful interference to the PMS. An administrative fine of TRY 1.00 (one Turkish Lira) per each product produced, with a minimum limit of TRY 10,000.00 (ten thousand Turkish Lira) will be imposed for those who conduct machine operation tests, product trials or trial production in macaron and cigarette production facilities without notifying the Ministry of Agriculture and Forestry and without labelling or marking such products with the aforementioned special labels and signs, which are obligatory to be used in order to ensure tax security.

In the preamble of the Omnibus Bill it was stated that the purpose of the Omnibus Bill is to ensure product trials, machine operation tests or trial productions in cigarette and macaron production are carried out within the scope of the PMS, by adding the PMS to the necessary conditions at the stage of facility establishment permission, and thus, to establish product safety and to maximize deterrence by stipulating a heavy administrative fine in case it is detected that product trials, machine operation tests or trial productions are executed out of the scope of the PMS.

Regulation Regarding the SCT Law
On the other hand, in order to increase the effectiveness of the fight against smuggling, the determination of macarons subject to a special consumption tax without a special label or sign, which are obliged to be used in accordance with the TPL was included in the scope in addition to cigarettes solely made of tobacco replacer substitutes, and it was envisaged that those who possess, produce or import these products in a certain number will be held severally liable from the penalized assessment.

Regulations on the Production of Tobacco Products
In advance of the Omnibus Bill, under the Tobacco and Alcohol Law, within the scope of the conditions for those who wish to produce tobacco products in Turkey, it was required to establish facilities with complete and new technology, including tobacco preparation departments, with an annual production capacity of 2 (two) billion units in a single shift for cigarettes only; whereas, by the effectiveness of the Omnibus Bill, macarons, rolling paper and cigarette filters have been included within the requirement to establish facilities with complete and new technology, including tobacco preparation departments having a production capacity of 2 (two) billion units.

Accordingly; in addition to cigarettes by the Omnibus Bill, macarons, rolling paper and cigarette filters have been included within the scope of the procedures and principles to be determined by the president of the Republic regarding the importation of cigarettes, determination of the price of imported tobacco products and domestic marketing of cigarettes and the opportunities on being able to freely import, price and sell cigarettes from the same brand of those who produce annually at least 2 (two) billion units of cigarettes in Turkey.

These regulations will enter into force on the date of their publication.

Regulations on the Authorization Certificate
The Omnibus Bill has introduced that in order to fulfil requests for the application, amendment or extension of permits, conformity and authorization certificates for the production and import activities of tobacco, tobacco products, macarons, rolling paper, cigarette filters, alcohol and alcoholic beverages and the activities within the scope of the tobacco trade authorization certificate; it is mandatory not to have administrative fine debts which were imposed under the Tobacco and Alcohol Law and not paid in due time, unpaid premium and administrative fine debts to the Social Security Institution and unpaid debts to tax offices.

With the Omnibus Bill it was regulated that any documents related to the activities carried out within the scope of the Tobacco and Alcohol Law will not be issued by the Ministry of Agriculture and Forestry, not only for those who have finalized verdict of convictions for acts contrary to the Tobacco and Alcohol Law, but for those who have finalized verdict of convictions for acts contrary to the Law on the Monopoly of Alcohol and Alcoholic Beverages No. 4250, TPL and Anti-Smuggling Law as well. Additionally, it was stipulated that the certificates given to those who are detected to have committed acts contrary to the aforementioned provisions regarding the activities carried out within the scope of the Tobacco and Alcohol Law will be suspended until the decision of non-prosecution or court decision is finalized and no certificate will be given to the other real or legal person for such facility or workplace during this period.

Regulations on the Granting of Collateral
Regarding the production and import activities of tobacco, tobacco products, macarons, rolling paper, cigarette filters, alcohol and alcoholic beverages and activities within the scope of tobacco trade authorization certificate; it was introduced that the Ministry of Agriculture and Forestry is authorized to take collateral up to 50 (fifty) million Turkish Liras from those who have a permit, conformity and authorization certificate and those who have requests for the application, amendment or extension of the permit, conformity and authorization certificate, and in this context; it was envisaged that among those who are engaged in activities subject to the permit, conformity and authorization certificate, certificates related to the activity of those who do not provide the specified collateral may be suspended until the collateral is provided, and aforementioned documents for the facility in question may not be given to another real or legal person within this period.

Regulations on the Unauthorized Tobacco Trade
The Omnibus Bill has amended the penal provisions regarding unauthorized tobacco trade. In this context, it was regulated that if the macarons and cigarettes produced within the scope of machine operation tests, product trials or trial production in the macaron and cigarette production facilities are not destroyed within the period, an administrative fine of 1.00 (one Turkish Lira) for each unit produced, not less than TRY 10,000.00 (ten thousand Turkish Liras), will be imposed.

Enforcement
All regulations that are not separately stated in this Client Alert to enter into force on the date of its publication will enter into force on January 1, 2024.

By Asli Pamukkale, Senior Partner, Nur Duygu Bozkurt Kadirhan, Senior Associate, Ilayda Sak, Associate, Deniz Yontuk, Associate, Moral, Kinikoglu, Pamukkale, Kokenek

White & Case has advised Gorillas on its USD 1.2 billion sale to Getir. The Netherlands’ Ploum reportedly also advised Gorillas. Freshfields Bruckhaus Deringer reportedly advised Getir. Goodwin Procter, Orrick Herrington & Sutcliffe, and McDermott Will & Emery reportedly advised some of the investors.

Gorillas is a German on-demand grocery delivery company founded in 2020.

Getir is an on-demand grocery delivery company headquartered in Turkey. Through its mobile app, it offers on-demand delivery services for grocery items and a courier service for restaurant food deliveries.

The White & Case team was led by London-based Partners Daniel Turgel, Di Yu, and Emmie Jones and included lawyers in London, New York, Berlin, Frankfurt, Hamburg, Houston, and Paris.

White & Case and its Turkish affiliate GKC Partners have advised MNG Havayollari Ve Tasimacilik on its entry into a definitive agreement to become a publicly traded company through a business combination with Golden Falcon Acquisition Corp. for a pro-forma enterprise value of USD 676 million. Greenberg Traurig advised Golden Falcon.

MNG Airlines is a logistics provider and e-commerce enabler. MNG Airlines services more than 15,000 corporate customers across 41 countries via more than 3,500 flights per year and offers charter services with customized plane and capacity options in addition to scheduled flights and aircraft, maintenance, crew, and insurance services. 

The Golden Falcon Acquisition Corp. is a special-purpose acquisition company.

According to White & Case, “the transaction is expected to close in the first half of 2023, after which the combined company will be listed on the New York Stock Exchange under the new ticker symbol MNGA. As a public company, MNGA is expected to gain increased financial flexibility and to be well positioned to unlock new growth avenues and maximize value creation.”

The GKC Partners team included Partner Derin Altan and Associates Gokcen Durgut, Sehriban Unlu, and Ece Kuregibuyuk. The White & Case team included lawyers in New York, Chicago, Los Angeles, Washington, Paris, and London.

Greenberg Traurig fielded a US-based team.

Lexist, working with King & Spalding, has successfully represented the Republic of Turkey Savings Deposit Insurance Fund in ICSID arbitration proceedings against claims by a company related to the outlawed FETO organization.

According to Lexist, this was “a delocalized international investment arbitration administered by the ICSID Secretariat, World Bank, Washington DC, USA, ICSID Case No. ARB/18/18.”

The USD 6 billion claim that the tribunal threw out concerned a mining and media conglomerate that was accused of financing terrorism and placed under the control of trustees following an attempted coup in Turkey in 2016. In an award dated December 8, the tribunal declined jurisdiction over the claim brought by Ipek Investments Limited under the UK-Turkey bilateral investment treaty.

Lexist’s team included Partners Mustafa Dogan Inal, Eyup Kul, Murat Erbilen, and Turgut Aycan Ozcan.

Investigations of the Turkish Competition Authority against certain undertakings operating in the fast-moving consumer goods (FMCG) industry as producers, suppliers, and retailers to determine whether Article 4 of the Law on the Protection of Competition has been violated are ongoing and currently, verbal self-defense processes are being submitted.

In this context, Amending Regulation Regarding the Regulation on Principles and Procedures to be Applied in Retail Trade (“Amending Regulation”) has been published in the Official Gazette dated 7 December 2022 and numbered 32036 and entered into force.

Scope of the Amendment
In parallel with the investigation aforesaid, the Amending Regulation has introduced an obligation for chain stores to share data for protecting the effective competition. In this context; for establishing policies to ensure that competition in the retail industry is carried out according to effective and sustainable conditions, to disclose and enable consumers to make price comparisons in order to access better conditions; chain stores,

• Engaged in the sale of FMCG in the food retailing industry and
• Having more than two hundred branches

are obliged to transfer data regarding the marketized products and their branches to the system to be determined by the Ministry of Trade.

The procedures and principles of data transfer will be determined by the Ministry of Trade and notified to the chain stores, and if necessary these data may be shared with relevant institutions, organizations, and the public.

By Cerensu Cetin Yenigun, Duygu Bozkurt Kadirhan, Senior Associates, Moral, Kinikoglu, Pamukkale, Kokenek

“In 10 years you won’t go to meetings – you’ll digitally teleport to them.” Meta Founder, Mark Zuckerberg

Noting that the metaverse will not be built overnight by a single company, Meta said that many of the products to be designed for Meta’s concept will only be fully realized within the next 10-15 years. But Meta founder Mark Zuckerberg is promising to spend $10 billion a year on the metaverse over the next ten years as other major tech groups chase after him. He claims that in that time, the metaverse will reach one billion people, hosting hundreds of billions of dollars in digital commerce.

In January, Microsoft acquired gaming company Activision, considered one of the world’s largest developers and publishers of video games, in a $75 billion deal to provide the building blocks for the metaverse. Microsoft’s CEO Satya Nadella said that we will soon be sitting at a conference room table, either with our avatars or our holograms. But how do we adapt to employment in the metaverse, with labor laws largely developed in the context of the physical office? With the emergence of the Metaverse, we can say that both commercial and legal issues have come to the fore in areas such as contracts, data protection, and employment. Based on these ambitious statements, we examined the virtual office model, the metaverse phenomenon, its effects on the business world, and how employee data can be protected within the framework of current regulations.

“Corporate” Metaverse
During the pandemic, the way of working online has become a model adopted by most companies. Many employees continue to hold their meetings through applications such as Zoom and Teams due to the COVID-19 outbreak. Therefore, we can say that online meetings have replaced face-to-face meetings. As of mid-2020, the number of full-time remote workers in the US has increased by more than 40% compared to pre-COVID eras, according to the Stanford Economic Policy Research Institute. Technology companies that invest in the metaverse field such as Meta and Microsoft are carrying out some projects for the transition to “virtual meetings”, the next version of online meetings. According to the research of B2Press Online PR Service, 44 percent of employees want to work in the metaverse environment and this Bill Gates wrote on his blog, “In the next two or three years, I predict that most online meetings will move from 2D camera image grids to 3D space with metaverse digital avatars. Eventually, you will use your avatar to meet people in a virtual space that replicates the feeling of being in a real room with them,” he wrote. He also added that virtual reality (VR) glasses and motion capture gloves are necessary to understand body language and be able to hear the voices of others. Undoubtedly, such tools will expand the reach of employees, allowing them to run their businesses virtually.

Metaverse will create powerful opportunities for team building and collaboration in the virtual business world. While employees are in different locations in the physical world, they will be able to be in the same study room with their colleagues in the digital world. In this working model, which we can call a virtual office, employees will be able to attend meetings with their digital twins. Horizon Workrooms, a product of Meta company, and Mesh for Teams, which continues to be developed by Microsoft, can be given as examples of these projects. Meta claims that the work experience in the metaverse is much more real than Zoom or Teams meetings, with the detection of three-dimensional images, sound, and sensitive hand movements.

Company employees of Horizon Workrooms announced that they have successfully realized the virtual meeting experience using their avatars. The goal of both projects is to enable the employees to come together around a virtual table to discuss and maintain the work interactively. Moreover, through the three-dimensional digital twin, for example, an employee operating in the retail sector will be able to manage and control more than one store. A meeting can be held with simultaneous translation with someone who does not speak the same language or uses sign language. Therefore, hearing and speech barriers will no longer be an obstacle. MediaRubic, which provides services in the field of digital learning technologies in Turkey, took its place in Spatial, the metaverse platform, with MetaOfis. Claiming that it carries the seriousness of the real meeting room in its design, the company stated that it has an office with a campus look, an amphitheater with a giant screen where users can broadcast content, indoor and outdoor areas where they can socialize, a meeting room and a virtual classroom.

Is Business Law ready for the Metaverse?
Although Metaverse takes hybrid work one step further, it brings with it many legal problems. In terms of labor law, issues such as how employers will pay their employees, how the working hours and rest periods will be determined within the company, whether a work accident will occur as a result of malfunctions of vehicles, and bodily harm when employees switch from home to a virtual office with VR glasses may come to the fore. Practical difficulties may arise, such as how to revise employment contracts within the scope of the metaverse, and who will be responsible for unauthorized access to one of the avatars. However, it is very important to make a legal definition of the legal identity of avatars. In the Turkish legal system, there is no clear definition of avatars, which correspond to users, yet. Although avatars are a three-dimensional reflection of the users, it does not seem possible to qualify them as representatives because they do not legally have the title of the person. However, although the legal dispute does not take place in the metaverse environment, it is useful to examine the decision of the Court of Cassation dated 2020. In the incident that is the subject of the decision in question, the character he uses in the game, namely the avatar he created, is sold to a third party after the plaintiff’s e-mail address is entered without permission and the account information in the game “Knight Online” is stolen. Thereupon, the Court of Cassation states that the avatars have material value and concludes that the defendant obtained an unfair advantage over the avatar sold to the third party. In yet another decision, Antalya BAM accepts that the digital asset in the social media account and digital wallet of the deceased should be inherited with its decision in 2020. Based on this decision, it can be concluded that the assets owned in the metaverse can also be inherited and evaluated in the estate. However, the evaluation of avatars in this context will be determined in the future. Considering the explanations above, we can say that avatars are a material value or a means of communication, or there is a need for a determination on the definition of a new legal identity under the name of “metahuman”.

Although it is important to clarify the legal identity of avatars clearly, let’s examine the issue from a labor law perspective. The wheels of the physical business world turn with each country’s legal regulations. Belgium, for example, has officially switched to working only 4 days a week because of the increase in working hours with the working from home model. In California, workers can be fired without notice, while in the Netherlands, employees are generally not dismissed without approval from the court or the Dutch employment agency. Employers in Turkey must have a valid or justifiable reason for the termination of the employment contract. So, will national legislation protect employees, or does working in the metaverse world require a completely new legal arrangement? It is defined as a virtual model of the behavior and consequences of a physical product or service in the real world. In simpler terms, the digital twin; is a virtual model of a process, product, or service.

Under normal circumstances, the legal regulations of that region apply in whichever country or state the companies are physically in. However, when the metaverse is involved, rules by the decentralized structure will have to be operated. For this, to eliminate the problems that may occur in the virtual office environment, legal problems will be resolved either according to the law of the country where the metaverse platforms are established or according to the law of the country where the company and the parties having problems are located. If the legal processes are determined according to the law of the country where the platform is located, the laws of the country where the parties are located will lose their validity. If we look at the subject from another angle, the metaverse is a platform and the basic principles of the employer-employee relationship exist independently of this platform. In this relationship, it seems that it will not be possible for the parties to renounce the applicable country law. However, it should be noted that there are also opinions regarding the creation of world-specific rules independent of countries. Although different opinions on the subject are presented, the uniform rules suitable for the metaverse world have not been determined yet. The “Management Data and Artificial Intelligence for Everyone” study published by the European Parliament Research Group in July 2022, which companies and organizations that will be involved in the virtual business world in Metaverse can follow in determining their responsibilities, draws attention. The study, which includes the rules for the use and operation of artificial intelligence systems, can also be applied to the metaverse by analogy. In addition, the internal guidelines that determine the rules of operation in the metaverse environment will need to be updated taking into account the specific features of the platform.

How Will the Protection and Transfer of Employee Data Take place?
While examining business life in Metaverse, it is necessary to mention how employee data will be processed, stored, and transferred, since it is important for employers. Because, given the scale of personal data that technology companies like Meta expect to collect and monetize with employee participation in the metaverse, important responsibilities on the employer side regarding privacy and data security come to the fore.

The Financial Times produced a report analyzing hundreds of Meta’s applications to the U.S. Patent and Trademark Office. The report in question included that Meta collected many biometric data from eye twitches to nose sprains and body movements. This type of data helps companies ensure that the digital environments they create are realistic, and they are also used to direct targeted advertisements. In the physical world, the EU General Data Protection Regulation (GDPR) regulates what employee data can be processed, stored, and transferred, including employers’ medical and personal records, as well as assessments of those records. Within the scope of these rules, companies that want to join the metaverse world should consider how to protect their employees’ data in the virtual world and comply with data protection legislation. For this reason, when both Turkish and EU laws are taken into consideration, Meta’s collection of biometric data for mimics, which we mentioned above, may cause Turkish and EU companies to not favor Horizon Workrooms.

Under EU Law, Article 44 of the GDPR prohibits the transfer of personal data of EU citizens to countries outside the European Union that are not equivalent to the EU in terms of data protection laws unless certain safeguards are provided. Again, within the scope of employment contracts in EU member states, the processing of personal, health, and biometric data of employees is subject to certain rules. Although these rules vary between member states, they contain additional compliant regulations to GDPR.

In Turkish Law, except in exceptional cases within the scope of KVKK, employers are prohibited from processing personal data and sensitive personal data of their employees without their explicit consent. At the same time, processed personal data should not violate the principle of proportionality. In addition, it is also held responsible for fulfilling the obligation to inform about the purposes for which the processed data is processed, where it will be stored, or who can access it. For example, apart from exceptional provisions, employers are required to obtain explicit consent if they process biometric data such as fingerprints of employees. At the same time, fingerprint data needs to be limited and measured, related to the purpose of processing. In such a case, a magnetic card system or an SMS entry model may be adopted instead of fingerprint data, which is biometric data in terms of overtime control or physical space security in terms of workplaces. In addition, it is within the scope of the law that the processed data cannot be transferred to the country and/or abroad without the express consent of the employees. If the conditions stipulated for the transfer of personal data are met, it is stipulated that there should be sufficient protection in the foreign country to which the transfer is made and that certain procedures should be applied in cases where it is not available. It is stated by the Board that all e-mails sent and received in the use of e-mail service in workplaces whose servers are located abroad are considered as transferring personal data abroad, and those necessary procedures should be followed by employers.

When evaluating in terms of GDPR and KVKK, it is necessary to ensure that the data of the employees are used and protected only for the stated and agreed purposes by the consent they have given in the metaverse. For this, the compliance of service agreements with platform partners with the law should be observed. At the same time, employers should note that all current data privacy principles apply in the metaverse environment just as they do in the physical world. From this perspective, it should periodically review and update all standard operating procedures, risk management checklists, and compliance guides regarding the metaverse accordingly.

Employers will need to strike a balance between monitoring employee activities and protecting employees’ right to privacy. In the UK, the trust clause is an implied condition of every employment contract, but intense employee tracking violates this clause. To combat this issue, employers need to carry out a data protection impact assessment and ensure that any monitoring done is proportionate, used only for legitimate reasons, and where less intrusive measures are not possible. Compliance with the law seems very difficult in a metaverse environment where all kinds of movements of employees can be recorded and tracked. Therefore, it is expected that a data privacy law with inclusive and uniform rules will be created by the regulatory authorities for virtual office operation only in the metaverse.

With all the opportunities that the Metaverse will bring, come complex legal problems related to the way businesses operate. Companies need to anticipate these problems and take the necessary actions for legal compliance processes. Companies that will participate in the virtual working model in Metaverse are required to carry out both Labor Law and KVKK compliance processes, and to professionally audit the data they process and keep in information systems.

By Onur Kucuk, Managing Partner, and Ezgi Anasiz, Associate, KP Law

“The total insurtech industry value in 2022 was $5.4 billion. Revenue forecast for 2030 is $152 billion.” Grand View Research, Insurtech Market Size, Industry Report, 2022-2030

Digitalization in the financial sector and innovation in bank products and services are evident today. For example, personalized, fast and user-friendly services offered by the open banking system in banking are among the most concrete developments of digital transformation. In this way, many transactions can be easily handled online without going to the branches. From this point of view, we can say that financial digitalization, which started with the banking sector, also affected the insurance sector. In fact, Sigortam.net CEO Bora Uludüz states that 16 billion dollars have been invested in insurtech startups worldwide in 2021, and that there have been more than 30 unicorns in this field to date. In this article, where we discuss the concept of insurtech, which changes the dynamics of the insurance industry globally, we will explain the digitalization in the insurance industry, which is on the way to becoming a trend, its importance and the technological tools in the insurtech model.

What is “Insurtech”?

Insurtech is a combination of the words “insurance” and “technology”, inspired by the term fintech. Conceptually, it is designed to increase cost savings and efficiency by integrating technological innovations into the existing insurance industry. Therefore, it aims to transform the classical premium collection and compensation payment structure in the insurance sector into an innovative and user-oriented sector with the use of big data and customer expectations. It achieves this goal by offering ultra-customized policies, social insurance and new generation insurance products. Premiums of the insured are determined dynamically as a result of the analysis of their behavior with the data obtained from their internet-enabled devices.

Unlike companies based on traditional insurance understanding, insurtech based companies use basic data to identify risk groups. For example, it analyzes the geographical location tracking and smart wristband activities of the cars belonging to the insured, and prices the products more competitively by using inputs from all kinds of similar devices, and creates better defined risk groups. It uses deep learning-trained artificial intelligence (AI) to identify risk groups and accurate pricing models.

It is also useful to explain the concept of Insurtech with examples to make it more understandable. Insurance companies also benefit from the QR code application that has entered our lives. With the feature of getting offers with a QR code, drivers can quickly select the vehicle insurance that suits them by scanning the QR code on their vehicle license. Users who want to have life insurance can quickly handle services such as application or renewal of their policies through the mobile application. To get expert help, it is enough to talk by video. The customer, who reaches the suitable offer in terms of each insurance, is included in the system with a credit card and mobile signature and can purchase the policy.

Why Choose Insurtech Based Companies?

• Insurtech cares about customer needs and experiences.

The Customers learn more about choosing insurance product coverages and getting personalized service. The policyholder explores and explores options using the internet and mobile applications. Instead of going to a branch or speaking to a representative, insurtech’s future is insured with an online agreement, by identifying the most suitable product for customers.

• Insurtech increases productivity. Many insurtech companies allow users to quickly access the information they need at any time, without getting bogged down in the process, without having to wait for office hours or an available representative.

• Insurtech stands for individuality. Due to the innovative nature of information collection and data processing, many new tools have been developed to better detect the true needs of each individual. This not only improves pricing, but also offers more reliable and consistent coverage based on historical data.

• Insurtech provides flexibility. Modern insurtech offerings are more likely to have flexible, customized, short-term or transferable plans. Rather than being locked into long-term arrangements, insurtech has a priority to provide individuals with a specific scope of products and services for a specific need over a specific period of time.

• Insurtech reduces operating costs. While traditional insurance companies operate in physical locations, insurtech-based companies network with customers around the world by working remotely. With the online company model, there is less overhead, insurtech companies that eliminate a physical office or staff have minimal costs. Due to the lower costs, it often offers its customers lower prices.

Innovations Driving Insurtech Change

Changing the shape of the process required to be insured, insurtech continues to pursue its goal of being permanent in the sector thanks to the range of technologies used, growing and developing. One of the most notable technologies utilized is artificial intelligence. AI systems now allow certain tasks that previously required human intervention to be performed solely based on technology. For example, where previously it was necessary to interact with agents to answer customers’ questions, chatbots now allow the customer to get help solving their problems without speaking to a human. Another technology is seen as machine learning. In its simplest terms, machine learning focuses on the use of data and algorithms and is the compilation of predictive models from the data obtained. If future data is integrated into the model with machine learning, it can already “learn” or continually “assess” how to calculate appropriate premiums based on demographic or risk profiles. Developed automation tools, on the other hand, appear when insurance customers fill out an online document, save it or issue a ready-to-sign policy. Insurtech is also developing in conjunction with innovative hardware technologies. For example, drones can be used to determine the value and damage of properties or to inspect insured claims. Especially since drones have the feature of taking high-resolution photos and videos, they are being used by many industries, and this contributes to reducing costs in most companies. We can say that another insurtech tool based on physical innovation is the internet of things. Although a digital concept, IoT relies on the interaction between physical products and software. For example, auto insurers now commonly use devices that measure vehicle speed, handling and driving habits to reward positive driving habits or penalize negative driving habits. The US-based company Avinew is seen as a pioneer in the insurtech industry in IoT technology. The company offers lower premiums to customers who change their driving habits, choose less risky routes or use an automatic driving system. With “big data”, insurance companies now calculate their premiums based on the smallest details. Companies that analyze the risk profiles of their customers according to their habits and characteristics both calculate premiums and offer appropriate insurance products with the millions of data they collect. So much so that the company called Dacadoo, founded in Switzerland, collects data from customers’ devices such as phones and smart watches via API. The data collected allows Dacadoo to assess risk in real time and create individualized profiles, positive or negative.

What does the law say?

While innovative steps in the insurance sector are progressing slowly, there are many reasons why established insurance companies are not in a hurry to adapt. Most Insurtech startups still need the help of traditional insurance companies to handle underwriting and manage catastrophic risk. However, as it attracts consumers with its refined model and user-friendly approach, it can be said that established players are warming to the idea of insurtech and are interested in purchasing some innovations. The insurance industry is a highly regulated industry with a multi-layered legal structure. A number of changes have also been made in Turkish law, in the field of insurance, especially with the impact of the COVID-19 pandemic. For example, in the 5th article of the Regulation on Information in Insurance Contracts, it is possible to provide information in the digital environment. For this purpose, 3DSecure concepts were included for the security of permanent data storage and payments made by debit or credit card in case insurance contracts are made at a distance. Permanent data storage is the recording of the transmitted information in media such as text message or e-mail, when it is not possible for the parties to come together in a physical environment. In such cases, insurance companies are obliged to record the information text, for example, if they inform about the insurance contract via e-mail or text message. At the same time, it is foreseen that the conversations will be recorded in cases where the information is made through the call center or telephone. In addition, through the relevant legislation, remote appraisal procedures are provided at the time of damage, and remote examination services are provided within the scope of health insurances, regulated by the Regulation on the Delivery of Remote Health Services.

Adoption of insurtech methodologies to ensure the confidentiality of personal data creates some reservations by companies. The tracking devices, which can detect whether the customer actually stops at the stop signs, also track the customer’s location, the places he has visited and how long he has stayed at these locations. As a result of this follow-up, many data are processed with the use of artificial intelligence technology. In such cases, it is important to comply with the KVKK and board decisions in order not to cause violation of the fundamental rights and freedoms of the persons whose personal data are processed.

Result

• Insurtech is the use of technological innovations designed to make the current insurance model more efficient.
• Insurtech enables products to be priced more competitively using technologies such as data analytics, IoT and artificial intelligence.
• Insurtech is used to process claims more effectively, assess risks, process contracts or warrant policies.
• Insurtech is like fintech in that both leverage modern solutions that revolutionize every traditional industry.
• There are some problems for Insurtechs, especially due to regulation and reluctance of established insurance companies to work with them.

The insurance world is developing rapidly thanks to the solutions offered by technology companies. With Insurtech, businesses can deliver a better customer experience for less money. This creates a win-win model. It will be interesting to see the different business models developed to create and leverage technology and how they affect the industry in the future.

By Onur Kucuk, Managing Partner, and Ezgi Anasiz, Associate, KP Law

Turkey’s high inflation stirs real estate disputes while logistics tenants and labor-intensive sectors are deeply affected, according to Ebru Temizer, Partner of Kinstellar Turkish affiliate Gen Temizer Ozer.

“Currently, high inflation is the hottest topic, affecting everyone’s lives in one way or another,” Temizer begins. “It is a major discussion point among lawyers, the business community, and ordinary citizens. Official figures are not fully reflective of the reality, as, in fact, prices have doubled compared to last year.”

Consequently, Temizer highlights that inflation has had a major impact on real estate. “Real estate prices and rent have increased a lot, leading to numerous disputes,” she notes. “Normally, landlords cannot file a lawsuit to redetermine the price of real estate unless five years have passed since the initial lease agreement, however, in practice, we see frequent lawsuits even when only two years have passed.”

Temizer says that clients that rent logistics warehouses are frequently struggling, as the rent is the critical factor in their costs. “Interestingly, courts see the high inflation as an unexpected event and, in some cases, they decide matters in favor of landlords,” she adds. “It is very difficult to manage businesses in Turkey, because of these factors.”

On top of that, according to Temizer, some sectors – especially labor-intensive ones such as the logistics and industrial sectors – are affected very deeply. “Generally, the prices in such sectors are increased in parallel with the minimum wage increase on an annual basis, and around 60% of contract prices are based on minimum wages in addition to other variables,” she says.

“The price indexation formulas under the agreements regulate that the prices shall be increased annually,” Temizer points out. However, she says, this year, for the first time in the last decade, the government has increased the minimum wage twice already, in January and July. 

According to Temizer, “since July, there has been a 30% increase in the minimum wage in addition to the 50% increase effected in January, and there have been intense discussions about whether to implement the additional increase in the minimum wage which was effected in July into the contract prices and how.”

Finally, she points out that there have been huge heated discussions and negotiations on behalf of service providers about how to renegotiate the prices. “We try to find alternatives and figure out whether the current situation should be structured under force majeure, or what classifies as force majeure at all,” Temizer wraps up.

Heuking Kuhn Luer Wojtek has advised Turkish duty-free operator Setur on the award procedure to operate the duty-free and duty-paid areas at Cologne Bonn Airport.

“Following a Europe-wide invitation to bid, Cologne Bonn Airport selected Setur as the new partner for its duty-free areas,” Heuking reported. “The new retail sections will be located behind the passenger checkpoints in the security area in Terminals 1 and 2 and will offer passengers at Cologne Bonn Airport a varied shopping experience and a high-quality waiting zone. The opening is scheduled for June 2023.”

The Heuking team was led by Frankfurt-based Partners Ali Sahin and Erdem Sismangil and included teams from the firm’s Frankfurt and Dusseldorf offices. 

The firm did not provide further information on the deal.

Former Moscow-based Baker McKenzie Partner Simon Morgan has joined the Banking & Finance department of Baker Turkish affiliate Esin Attorney Partnership.

According to the Esin Attorney Partnership, Morgan specializes in financial restructuring, financing, distressed assets, as well as M&A and private equity. Morgan is a graduate of Aberystwyth University. Before joining Esin, he spent ten years as a Partner with Baker McKenzie’s Moscow office. Before that, he spent four years with White & Case as a Partner. Earlier still, Morgan started his career with Clifford Chance in 1992.

“I am very excited indeed to be joining the Esin Attorney Partnership, an undisputed and highly respected leader in the Turkish market, and immensely looking forward to working with Muhsin and the team and simultaneously offering English law expertise on the ground in Turkiye to our clients and expanding and strengthening our position in the Turkish market even further,” Morgan commented.

“We are delighted to welcome Simon to the team,” Esin Attorney Partnership Head of Banking & Finance Muhsin Keskin added. “We see a growing demand from our clients for English law expertise. His versatile English law expertise and experience will strengthen our practice and provide our clients the comfort and flexibility to receive English law advice.”