Compulsory Earthquake Insurance Policy Transfer Ban: Implications for Market and Ownership Dynamics

The new transfer restriction on Compulsory Earthquake Insurance (DASK) policies is set to reshape risk distribution and liquidity flows within Turkey's insurance sector.

Mechanics of the Transfer Ban

■Post‑sale DASK policies will no longer be transferable to the new property owner.

■When a property changes hands, prepaid premium for unused days will be refunded to the original policyholder.

■Land registry offices will verify whether the incoming beneficiary already holds a DASK contract.

■In cases outside the exemption, the new owner must notify the insurer within 15 days; the insurer must process the request within 24 hours.

Potential Market Participant Impacts

■Insurers: Extended policy terms increase technical reserves, creating short‑term liquidity pressure.

■Real‑estate market: Additional procedural steps may lengthen closing times and exert downward pressure on transaction prices.

■Institutional investors: DASK‑linked asset valuations will need model adjustments, possibly leading to a repricing of risk premiums.

Risk Management and Liquidity Outlook

■The rule limits the use of DASK as collateral for loans, potentially tightening banks' collateral frameworks.

■Premium refunds trigger short‑term cash outflows, affecting insurers' free cash flow.

■The beneficiary‑verification process adds operational costs for insurers.

Regulator and Industry Responses

■SEDDK cemented the amendment by publishing it in the Official Gazette, providing a solid legal foundation.

■Industry bodies are calling for enhanced transparency and improved customer communication procedures.

■Analysts note the reform could boost insurance penetration but may also spark short‑term market volatility.

Markets view this regulation as a catalyst for strengthening insurers' technical reserves while increasing transaction costs in the real‑estate sector. Expect short‑term liquidity strains and price swings, but a longer‑term shift toward more transparent and sustainable risk transfer mechanisms.