A report by Fitch notes the momentum in the insurance sector in Central America and its growth potential.
From the report by Fitch Central America is entitled "Performance of Insurance Industry Central America: Well Positioned for Growth ":
The insurance industry in Central America managed to increase premium production by 12% compared to 2010, where Panama, Guatemala and Honduras recorded an above-average growth.
Privatization has attracted several foreign insurers and consumers are already benefiting from freedom of choosing between different options.
From 1924 to 2008, insurance was a state monopoly. Although this scheme was useful to the country and society in the twentieth century, it was impossible to continue in this way in a globalized market. Costa Rica suffered from a lack of modernization and diversification of the insurance market, and especially the absence of a regulatory agency.
The number of insurance intermediary companies grew by 75% from 8 to 14 in the last twelve months.
The number of insurance brokers in Costa Rica is now 14, a significant increase, up 75% from March 2011 to March 2012. While the number of intermediaries has increased, the number of insurance companies in decreased to nine during the same period, a reduction of 11.4%.
The total exclusivity requirement imposed by the National Institute of Insurance on agencies who sell their insurance, is an anticompetitive mechanism that is making it difficult for the market to open up.
In his blog " Mercado Seguro " in Elfinancierocr.com, attorney and insurance specialist Said Breedy analyzes the criteria issued by the Commission to Promote Competition (COPROCOM) on the exclusivity clause in agency contracts with the National Institute Insurance (INS) in place since 2007.
In Costa Rica private insurers have come into the market, primarily selling life and car insurance, with customers seeing lower rates.
Although the National Institute of Insurance (INS) remains the undisputed market leader, private insurers are gradually gaining ground, particularly in the areas of auto and life policies.
The INS, an agency which has been in existence for 84 years, still controls 97% of the auto insurance market and 94% of life policies. In the former, in which $200 million worth of business was done in 2011, only Mapfre Seguros has taken a toll on the quasi-monopoly of the INS, taking 3% of the market, according to data released by Nacion.com.
The Decline of the State Social Security Fund is forcing Costa Ricans to seek private health insurance.
Buying private health insurance could be an option for Costa Ricans in the face of deficiencies in the Social Security Fund (CCSS), a state health system that is ailing.
However, despite a growing demand for good quality health services, there are still few options for private health insurance, reports Insidecostarica.com.
Insurance companies in Costa Rica paid out 19% more in 2011 than the year before on account of damage claims.
Insurers paid out ¢186,960 million ($ 362 million) last year to compensate customers who suffered losses, which is 19% higher than expenditures in 2010.
"The losses depend on the type of insurance, for example, strong sales have been made in policies for medical expenses and health services.
Three years since the privatisation of the insurance sector, the state agency (INS) remains the main entity in the market.
The market dominance of the National Insurance Institute (INS), with 94% of total premium income, is, in the opinion of the Association of Private Insurance (AAP), a result of the supervision exercised by the Superintendency of Insurance (Sugese).
As published in the Official Gazette, Law No. 8956 Regulating the Insurance Contract is applicable on policies taken out from today.
Among the new features of the new, approved by the Legislative Assembly on 2 June, are the updates of what is considered insurable interest, the minimum amount of fees, definition and general aspects of the premiums.
"With this new legislation, a classification of insurance type (damage, fire, transportation, liability, etc.) has been established and conditions defined for life insurance" writes Sergio Morales writes in his article in Elfinancierocr.com
Life and Accident insurance policies could become interesting niches for new entrants to the market.
Costa Rica's insurance market, which recently ceased to be a monopoly of the National Insurance Institute (INS), and became a free market where new companies have been encouraged to enter, is still in its infancy.
Only 21% of the population has a life insurance policy, and about half do not have coverage for cars, according to a study by El Financiero.
The Costa Rican Chamber of Commerce will sell ‘autoexpedibles’ (self-issuing) insurance policies from the National Insurance Institute (INS).
The Chamber, through the alliance, will offer these insurance policies, which do not require any special study to be conducted, said William Constela, CEO of the INS.
El Financierocr.com reported statements by the executive, "an alliance with the Chamber was decided on because of its accessibility to dealers and a large group of citizens working in the commercial sector, potential customers for these policies."
Three years after removal of the monopoly in Costa Rica, sales by private insurers are growing, although the state insurer, INS, still maintains more than 90% of market share.
Although the National Insurance Institute (INS) still retains most of the market, private insurers have gradually increased their presence.
Of eleven listed companies, seven reported sales in the first half of the year and most believe that conditions exist to continue increasing sales and consolidating their position in the market.
The insurer will launch a strong campaign to enter the market, looking to create demand for its services.
Eugenio Magdalena, executive vice president of International Markets at Pan-American, remarked that the company will provide individual insurance, focusing on life, health and accident policies.
“Alfredo Ramirez, local manager of the company, explained that their first product will be a collective life and health insurance and that it will be available on August”, reported Elfinancierocr.com.