Costa Rica: Outlook for the Insurance Market

Fitch projects a growth close to 15% in premiums this year, in a context of economic stability and consolidation of strategies by insurers.

Monday, April 10, 2017

From a report by Fitch Ratings:

Strong growth in premiums: the Costa Rican insurance industry grew by 16% in terms of premiums written up to the close of 2016, the result of a reclassification in the financial figures of the state - owned company and the largest market participant, Instituto Nacional de Seguros (INS), which was influential in the growth of -9% in 2015. Excluding this reclassification, the sector's growth reached 9% at the end of 2016, which is still a favorable level, according to Fitch Ratings. Meanwhile, private equity insurers recorded premium growth of 35%, thanks to innovation in products and marketing channels.   

Improvements in operating performance: At the end of 2016, the Costa Rican insurance industry had a combined ratio of 105.4%, a favorable figure in relation to the 111.5% of 2015. This resulted from a significant improvement in the accident rate in the sector, product of a focus on profitability in underwriting policies in the main business lines, especially by the state-owned company, which also improved its performance. Operational efficiency of the market remained stable, helped by sustained growth in premiums, which allowed companies to properly dilute higher costs.  Fitch Ratings believes that the combined ratio will approach 100% in the medium - term due to a strategic focus on profitability on the part of insurers.  

Read full report (in spanish).

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Insurance in Central America: Outlook for 2018

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An accounting change in state insurance company explains the reduction of 3% in total industry premiums at the end of the first half of 2015 compared to the same period in 2014.

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Fitch Rating's Special Report: "Insurance Industry Costa Rica: End of the State's Monopoly"

Costa Rica's insurance industry had been dominated by a state-owned monopoly until the new Insurance Law of 2008; up to December 2008 it is the largest and fastest growing market in Central America (excluding Panama).

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There was an improvement in accident rates and operating performance in the Nicaraguan insurance sector in 2008, as reported by Fitch in a special report.

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