Ten years after the elimination of the insurance monopoly in Costa Rica, private insurers have managed to "steal" from the state company about 12% of the market.
Mapfre Seguros, Sagicor, Assa Compañía de Seguros and Best Meridian Insurance are some of the 12 private companies that have been competing in the Costa Rican insurance market since 2008, when the law came into force opening up the business which for more than 80 years was in the hands of a single company, Instituto Nacional de Seguros.
The Superintendency of Insurance has asked for explanations from the National Insurance Institute over recent announcements made on grants and loans for road works and other government programs.
The superintendent argues that while the National Insurance Institute (INS) has the power to grant loans, the authorization to do so "is contingent upon the best practices of the insurance business."Nacion.com adds that "...The Law Regulating the Insurance Market dictates that 25% of the profits of the Institute are transferred each year to the State; the remaining 75% is to be used to capitalize the insurance business. "
The Superintendency of Insurance in Costa Rica is planning to start the process of opening up the market for compulsory automobile insurance in the first quarter.
In order to liberalize the market for compulsory automobile insurance, there first needs to be a review and approval of a decree which will focus on the regulation of the sale of insurance from the National Insurance Institute (INS) to private companies.
Low-cost auto insurance policies are rapidly expanding the insurance culture in sectors of the population who can not access traditional policies.
Since the opening up of the national insurance market in 2008 and the incursion of microinsurance in 2010, 64 different types of products have been created.
In the last interannual period personal insurance increased by 11%, general by 5% and compulsory by 9%.
From a bulletin on the Insurance Sector in November 2013 by the Superintendency of Insurance:
BASIC INDICATORS
The total amount of direct premiums collected reached c436,3 billion in November 2013. The involvement of voluntary insurance equaled the average of the last four annual periods - Nov 20l0-Nov 20l3), 73%.
Five years after the opening up of the market, there have been 500 new products and some prices have dropped by up to 40%, but penetration is still low.
In an interview with María Morales from Markets & Trends undertaken with the Superintendent of Insurance in Costa Rica, Tomas Soley, the official explained that the opening of the market has led competitors to offer more value added products.
The Constitutional Chamber of the Supreme Court has rejected an appeal that opposed the opening of the market, which includes Occupational Risks and Compulsory Auto Insurance.
This constitutional ruling completes the insurance market opening which started four years ago. The end of monopolization of this type of insurance was scheduled for January 1, 2011, but was stopped because of a constitutional motion filed on December 21, 2010.
The Central Bank of Costa Rica is putting to public consultation the Regulation for Defence and Consumer Protection Insurance.
The regulation will be under consultation until 27 December.
Nacion.com reports that "According to this regulation, all natural or legal persons who are properly identified can make complaints or appeals with insurance firms provided these requests relate to their interests or legally recognized rights."
The Costa Rican Superintendent of Insurance issued a technical note to set limits on the marketing of insurance by foreign companies.
Following the adoption of DR-CAFTA, foreign insurers can market insurance for shipping, commercial aviation and goods in transit in Costa Rica, without being formally established in the country. It is enough to register with the Superintendent of Insurance (SUGESE) and obtain approval for each product marketed.
In February, the period for banks to get authorization from the Insurance Superintendence to continue selling insurance policies will end.
According to the new Insurance Law, as reported by Nacion.com: "Banks have to set up a company exclusively for the sale of insurance, and it has to be accredited with the Superintendence.
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