Road-Traffic Accident Compensation Calculations
Compensation for material and moral damages resulting from traffic accidents is an important area that is constantly updated and discussed in the Turkish legal system. Especially the Constitutional Court (AYM) and finally Annulment decisions made by the Council of State, has led to significant changes by refocusing the "actual damage" principle in compensation calculations. These decisions eliminated the legal basis of traffic insurance general conditions and opened the door to a new era in judicial practices.
Landmark Current Decision of the Council of State
Eighth Chamber of the Council of State dated 19/12/2024 and E.:2020/772; K.: decision no. 2024/7229, has canceled the phrase "caregiver expenses, other expenses related to treatment and expenses due to partial or complete decrease in working capacity due to traffic accident" in the General Conditions of Highways Motor Vehicles Compulsory Financial Liability Insurance (ZMSSGŞ). In addition, Annex 3 titled "Calculation of Loss of Support Compensation" and A.5 amended by Article 3 of Annex 2 titled "Disability Compensation Calculation". It also canceled the phrase "according to the principles set out in Annex 3 of these General Conditions" in clause (d) of the first paragraph of the article. This decision clearly stated that it eliminated the legal basis of the compensation calculation principles in general conditions.
While making this annulment decision, the Council of State took the Constitutional Court's previous annulment decisions as basis and based on the calculation principles in the general conditions. results contrary to the principle of compensation for actual damage. and emphasized that it did not fully meet the rights of the injured party. This situation caused the insurer's liability to differ from the operator's liability, preventing the victims from receiving full compensation. This decision of the Council of State has no effect on compensation calculations. Priority of the general provisions of the Turkish Code of Obligations (TBK) and judicial precedents confirmed once again.
The Fundamental Role of the Constitutional Court Decisions
This current decision of the Council of State, Based on two critical annulment decisions given by the Constitutional Court:
1. First Cancellation Decision (dated 17.07.2020, numbered 2019/40 E. and 2020/40 K.): The Constitutional Court annulled the phrases "under the general conditions" and "general conditions" in Article 90 of the Highway Traffic Law (KTK). This annulment decision was based on the principle of inalienability of legislative authority and the grounds that it violated the freedom of contract, the right to live, the right to protect and develop material and spiritual existence, and the right to property. With this decision, the compensation calculation tables in the traffic insurance general conditions and especially the The legal basis for the 1.8% technical interest application has been eliminated.
2. Second Cancellation Decision (dated 29.12.2022, numbered 2021/82 E. and 2022/167 K.): The Constitutional Court also annulled the regulations added to Article 90 of the KTK by Law No. 7327, which bound compensation calculations to general conditions and a discount rate not to exceed 2%. This second annulment decision states that compensation arising from traffic accidents is not regulated in the Turkish Commercial Code. It should be determined in accordance with the provisions of the Turkish Code of Obligations regarding torts. emphasized once again.
On the basis of these annulment decisions of the Constitutional Court, The compensation responsibilities of the insurer and the vehicle operator should be based on the same legal principles. and the principle of full compensation for the "actual damage" of the injured party. Otherwise, the principle of protecting the victim, which is the purpose of compulsory liability insurance, would be damaged and the difference in liability between the insurance company and the operator would have negative consequences for the injured party.
Re-emphasis of the “Actual Harm” Principle
The main principle on which these judicial decisions focus is that compensation “actual damage” . In damage calculations, the principle of "assumptions cannot be relied on when the truth is clear" is essential. This principle requires that past period losses be calculated concretely based on known data, and future period losses be calculated based on the most recently known earnings.
Current Changes and Debates in Compensation Calculation Methods
Following the decisions of the Constitutional Court and the Council of State, there have been significant changes in compensation calculations:
• Life Tables: Life tables are used in compensation calculations to determine a person's remaining life expectancy. While the PMF-1931 French life table was previously common, TRH 2010 National Mortality Table‘. TRH 2010 is preferred because it provides data more appropriate to the realities of our country.
• Technical Interest Application: As a result of the annulment decisions of the Constitutional Court, the provisions brought by the ZMSS General Conditions 1.8% technical interest application is no longer possible is accepted. Calculations made by taking technical interest as zero can increase the compensation amount by 30.5%. This situation means an increase in costs for insurance companies and brings with it allegations that it leads to unjust enrichment. Arguments argue that the real discount rate should be greater than zero. If
• Preferred Calculation Methods:
◦ Progressive Annuity Method: Especially by the judicial bodies after the annulment decisions of the Constitutional Court Progressive Annuity Method has become preferred. In this method, compensation is calculated assuming that revenues will increase each year. The established practice of the Supreme Court is to calculate by making a 10% increase and a 10% discount for each year based on the last known income, which means a 0% discount in real terms. Although this method is considered advantageous because it produces results in favor of the victim, it is criticized because it is not standardized and is not based on actuarial basis.
◦ Fixed-Term Annuity Formula with Payment per Period-Technical Interest Method: This method, which insurance companies find more balanced, has lost its legal basis with the annulment decisions of the Constitutional Court.
◦ Average Earnings and Fixed Profit Method: In this method used in the past, the annual income increase was accepted and then discounted and a lump sum payment was made.
• Active and Passive Period Calculation: Compensation accounts are divided into two: "active period" (time worked) and "passive period" (retirement/old age period). In the active period, the person's professional earnings are taken as basis, and in the passive period, legal minimum wages are taken as basis. The Supreme Court has adopted the calculation of passive period losses, accepting that people will support them by "helping and serving" even in old age and retirement periods.
• Based on Actual Earnings: In the compensation calculation, instead of understated earnings on payrolls or tax returns “real earnings” . If earnings cannot be determined, the calculation is made based on the minimum wage or by requesting comparable earnings from relevant professional organizations.
• Items that cannot be deducted from compensation: Inheritance and inheritance income, income obtained from assets (rent, interest, dividend), life and personal accident insurances earned by paying premiums, widow and orphan pensions granted by SSI from the death branch is not deducted from compensation. This is a requirement of the principle of avoiding practices that will result in rewarding those who cause harm.
• Raising Expense in Case of Child Death: It has caused intense reactions in the society and since it has been determined by ILO-TURKSTAT research that children contribute to the family economy, there is an increase in child deaths. Not making a deduction under the name of "raising expenses" when calculating compensation to parents The search for is required.
Problems Encountered and Seeking Solutions
The basic problems and solution suggestions encountered in compensation law are also important:
• Method Unity Problem: There is no harmony in compensation calculation methods among institutions (SGK, insurance companies, judicial bodies), and this leads to prolonged litigation and unfair results.
• Expert Expertise: Compensation calculations are not just a simple calculation task, but a process that requires a full legal evaluation. It is stated that lawyers specialized in this field should be appointed as experts. It is not enough for actuaries without legal knowledge to make these calculations alone.
• Uncertainty of Non-Pecuniary Compensation: Although it is essential to take into account the characteristics of the concrete case in the Code of Obligations (TBK Article 56) in determining the amount of non-pecuniary damage, this may lead to contradictory decisions. The need to ensure uniformity in the judiciary by developing objective criteria and schedules is emphasized.
• Legal Gaps and the Need for Uniformity: It is stated that the gap created by the Constitutional Court decisions should be filled and compensation calculations should be clearly regulated in the legislation.
• Fund System Proposal: There are criticisms that lump sum and cash payment of compensation does not provide long-term security for the victim and imposes a disproportionate burden on insurance companies. In order to balance these problems, it is recommended to establish a fund system that will ensure the payment of compensation on a monthly basis.
• Limitation Periods: The shortness of the statute of limitations for tortious actions has been seen as an important reason for loss of rights for years.
• Obstacles to Seeking Rights: Strict interpretations and applications of civil procedure law have placed insurmountable obstacles in front of those seeking justice. Failure to fully adopt regulations such as "uncertain debt litigation" still causes problems.
Result
The last annulment decision of the Council of State and the previous decisions of the Constitutional Court, in the compensation calculations arising from traffic accidents the absolute superiority of the "actual damage" principle and the general provisions of the Turkish Code of Obligations emphasized once again. These decisions eliminated the legal basis of traffic insurance general conditions and prevented compensation amounts from being determined by insurance companies.
Although these legal developments are considered an important step to ensure uniformity and justice in judicial practice, there are still methodological problems and uncertainties that need to be resolved. In the future, in order to place compensation calculations in a more transparent, predictable and fair framework, legal regulations, actuarial data should be updated in line with the country's realities, and the importance given to specialization in legal education should be increased.
