What Is Surety Insurance in Türkiye?

Surety Insurance: Three Parties, One Bond

Under the Surety Insurance General Conditions (Kefalet Sigortası Genel Şartları) the insurer, against the risk that a debtor fails to perform the obligation defined in the policy, stands as guarantor for that debtor and provides security to the beneficiary named in the policy, paying that beneficiary under the obligation it has assumed. The money moves to the creditor, not to you.

Three parties sit at the table and their Turkish names are easy to confuse. The sigorta ettiren (policyholder) pays the premium and is the party whose obligation is secured — usually the business itself. The sigortacı is the insurer taking on the role of guarantor. The lehtar (beneficiary) is the creditor to whom the bond is addressed: a public authority, an employer, a customs office or a commercial buyer.

Two structures are recognised. In direct suretyship the insurer itself stands as guarantor towards the beneficiary. In indirect suretyship a bank, a credit guarantee institution or another financial institution stands as guarantor, and the insurer assumes an obligation towards that institution. Bonds may be issued conditionally or payable on first demand, and that distinction decides how easily the beneficiary can call on the money.

The Bond Types Set Out in the General Conditions

The general conditions define each type of security and state that the list is not exhaustive. The table below covers the headings you will meet most often in a policy.

The last two rows explain why a surety bond is discussed as a security instrument at all: the general conditions set out separate and stricter definitions for public procurement and for public receivables. A public procurement bond is unconditional, definite, primary, independent of the insured's obligation, for a fixed term and payable on first demand. For public receivables the same qualities are required without a term. The public procurement clause annexed to the general conditions also disapplies, in that field, the provisions allowing bonds to be issued conditionally.

A Bond Does Not Extinguish the Debt

Surety insurance parts company sharply with other classes at one point, and this is where quotations are most often misread. Under a fire or motor policy, once the claim is paid the matter ends. Under a surety bond it does not.

The recourse article is unambiguous: the policyholder repays to the insurer the amount paid under the bond, together with costs and default interest as agreed between the parties, not exceeding the statutory rate. The subrogation article points the same way: to the extent of the sum paid, the insurer steps into the beneficiary's shoes and succeeds to the beneficiary's rights against the debtor.

A bar on defences is added on top. Where the obligation is not performed and the bond is called, the policyholder may raise no defence or objection against the insurer as to the reason for the call, its amount or the outstanding balance. The insurer may notify the policyholder of the beneficiary's claim and ask it to take steps, but it may equally pay without waiting for a reply.

So surety insurance is not a transfer of risk; it is a guarantee of payment. The beneficiary is paid on time, while your debt does not disappear — only its counterparty changes. Understood correctly, a surety bond is a versatile instrument; misunderstood, it becomes a heavy surprise at the moment it is called.

Who Uses It, and What the Insurer Examines

The party that needs a bond is the party required to post security with a counterparty. In practice the heaviest use falls into these areas:

The insurer's examination looks much like credit analysis. The general conditions require the policyholder to submit its latest annual accounts and any independent audit report, to disclose its cash and non-cash credit relationships, not to grant security over its assets to third parties without informing the insurer, and to report material changes capable of affecting the decision to provide security. The insurer, for its part, may refuse individual requests with reasons even where a general surety limit has been allocated, may ask for collateral, and may decline to stand as guarantor at all on the information and documents presented to it.

SEDDK's circulars on surety insurance frame that examination further. Insurers are required to establish a financial risk assessment unit; setting a security limit involves reviewing the current ratio, liquidity ratio, debt-to-equity relationship, annual turnover and net profitability; and collateral is expressly disregarded when the ability to perform is assessed. A bond will be refused where bankruptcy proceedings have been opened against the applicant, insolvency has been documented, or a composition moratorium has been granted.

• Contractors bidding for public tenders — bid, performance and advance payment bonds.
• Construction and engineering firms — performance bonds and manufacture, maintenance and repair bonds.
• Importers and exporters — securities posted with customs administrations.
• Businesses posting security with a tax office or a court — public receivables and court bonds.
• Employers whose staff handle cash or valuables — fidelity bonds.
• Buyers purchasing goods and services on credit terms — contract and payment bonds.

How a Bond Is Verified: SBM and the Electronic Bond

A security instrument is worth what the counterparty can verify. In Turkish surety insurance that verification runs through the Insurance Information and Monitoring Centre (Sigorta Bilgi ve Gözetim Merkezi, SBM). Circular 2025/13 of 25 April 2025, currently in force, requires surety policies and the bonds issued under them to be created simultaneously through SBM, including the reinsurance split for the relevant policy. The same circular provides that where the prescribed limits are exceeded, SBM blocks the insurer from issuing further bonds.

Those limits are not arbitrary. The net security risk an insurer may carry for a single insured or risk group is tied to a ratio of its own funds, and the gross total across all bonds in force is capped at a multiple of those funds. The amounts underlying those ratios are updated each January and July in line with the producer price index published by the Turkish Statistical Institute, which is why no figures appear here; the current thresholds are read from the circular itself.

There is a fixed date ahead. SEDDK's Circular 2026/23 of 29 July 2026 on risk acceptance and management in surety insurance enters into force on 1 January 2027, and Circular 2025/13 is repealed the same day. The new text sorts surety securities into risk groups, tiers approval authority by group, and devotes a separate article to the electronic bond: verification, delivery to beneficiaries, safekeeping, return and maturity updates are carried out electronically; e-bonds are transmitted to SBM under electronic signature, and keeping a paper copy carries no legal effect.

What Changes on the Agency Side

Surety is not a class an intermediary can drift into. The article of Circular 2026/23 on intermediary technical staff training requires the technical personnel authorised to sell surety insurance to complete SEGEM training and pass the examinations held at the end of it. So it saves time to say at the outset which bond type you need, to which beneficiary, and for what term.

RYL Sigorta Aracılık Hizmetleri is an insurance agency. The surety policy and the bond are issued by the insurance company we act for, that company takes on the role of guarantor, and payment to the beneficiary is made by the insurance company. The agency's work is to fit the need to the right bond type and to walk through the general conditions' duties before the policy is written.

The questions to settle at quotation stage are fixed: will the bond be conditional or payable on first demand, what term does it run for, what maximum indemnity applies, what collateral will the insurer ask for, and how will recourse operate if a payment is made. If you would like those five settled up front, write to us through the quotation form.

Frequently Asked Questions

Sources

• Surety Insurance General Conditions (SEDDK, Turkish)
• SEDDK — Circular on Surety Insurance (2025/13)
• SEDDK — Circular on Risk Acceptance and Management in Surety Insurance (2026/23)
• SEDDK — Circulars, Communiqués and Sector Announcements
• SEDDK — Insurance Agencies

This article is for information only; the scope of cover is set by the policy’s specific and general terms.