Turkey's First "Building Completion Insurance" Was Signed Out
In May 2015, the Ministry of Customs and Commerce enacted the signing of the Building Completion Insurance, which took place in order to secure payments made before the turn-key delivery to the developer company for the house acquired through the sale of pre-paid housing.
In this context, the first insurance policy in Turkey, Aura Rosenberg & Parker Hill House Tepe İnşaat in Istanbul Omerli by means of an insurance company in Turkey have been signed for the project.
Mr. Gezen and GYODER members explained that they were in contact with the developers in this process and that the preparations for policies were started with the other firms.
The type of guarantee insurance is a 3-sided guarantee contract, rather than 2 parties, as in the case of other types of insurance. The parties to this contract are insurers, developers as insured and beneficiaries as consumers of households.
Building Completion Insurance policy guarantees prepaid home sales proceeds. In other words, in order to become a resident, the consumer guarantees the payments made to the developer until the turn key delivery.
If the developer can not fulfill the firm's obligations, the insurance company replaces the developer and implements the housing project and fulfills the obligations of delivering the key or repaying all payments made up to that date to the landlord.
Another difference is that since the insurance companies have a right to compensation through subrogation, the insurance company has the right to withdraw such payments from the developer in question.
The Building Completion Insurance protects consumers' payments from possible grievances by securing payments. It also provides new non-cash resources for the country's economy. By contributing to the increase in the premium volumes and equity of insurance companies, banks also have the advantage of transferring some of their non-cash credit portfolios to insurance companies and using their provisioning liabilities as cash loans.
In addition, the distribution of the total non-cash credit risk from the banking institutions to the insurance companies and the creation of a healthy economy are the distinguishing features of the Building Completion Insurance.
Unlike the alternative to the bank guarantee letter, the contract usually does not require collateral. Compared to others, insurance offers advantages such as lower cost and additional time for developer.