Costa Rica Insurance Market Evolution 2011

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On December 21st the Insurance Superintendency (SUGESE) held a press conference regarding the state and evolution of the insurance market in 2011.  2010 was the first real year that consumers were provided a choice of providers for their insurance needs, and 2011 was the first year that many of these providers were able to implement their strategies for the Costa Rican market.  Below is a synopsis of information presented by the Superintendent, Javier Cascante, in the conference.

Market Dynamics
Don Javier began by describing the growth of the market and its dynamics during 2011.  The National Insurance Institute (INS) went from holding a 98% market share to a 92% market share.  Since the level of premiums increased by month during 2011, much of this drop can be attributed to the growth of the market, as opposed to INS losing its customers to new competitors. 

Car Insurance, Life Insurance, Health Insurance and Fire Insurance were the top types of insurance purchased in 2011.  The variety of products offered grew from 214 in 2010 to 297 in 2011.  The number of insurance companies operating here grew from 7 to 10, with the number of agents representing companies, brokers or agencies growing from 1,028 to 1,085. SUGESE is in the process of authorizing ALICO, and expects 5 additional applications to be completed and authorized by mid-2012, bringing the total number of companies operating here to 16.

The current operators are:
Instituto Nacional de Seguros – State Owned
MAPFRE | Seguros Costa Rica, S.A.  –  Foreign Capital, Private
Assa Compañía de Seguros, S.A. – Foreign Capital, Private
Seguros Bolívar Aseguradora Mixta S.A. – Foreign Capital, Private
Seguros del Magisterio, S.A. –  Local Capital, Private
Alico Costa Rica, S.A. – Foreign Capital, Private
Pan American Life Insurance de Costa Rica, S.A. – Foreign Capital, Private
Aseguradora del Istmo ADISA, S.A. – Foreign and Local Capital, Private
Best Meridian Insurance Company (Sucursal CR) – Foreign Capital, Private
Atlantic Southern Insurance Company-Sucursal en Costa Rica * – Foreign Capital, Private
Quálitas Compañía de Seguros (Costa Rica), S.A. - Foreign Capital, Private
* pending approval, January 2012 deadline

Two Transnational providers are also authorized:
Factory Mutual Insurance Company
Caledonian Insurance Group
The transnational designation allows a company to provide service to their transnational clients without going through a registration process here. These policies may not be sold within Costa Rica, but claims may be processed here.

Market Regulation
In 2011 Law 8596 – The Regulation of Insurance Contracts – was approved in December of 2011, the SUGESE actively collaborated with the development of the law and is responsible for its implementation.  According to SUGESE supervisor, Tomas Soley, “The consumer now has a law regarding insurance contracts that excludes abusive clauses, particularly regarding claims” At the same time several board decisions were announced, many of which improved the regulatory process – maintaining standards required by the insurance law, but making the process more agile. 

Consumer Complaints
While SUGESE doesn't hear cases or resolve complaints, they do take action and require insurers to respond to complaints one way or another.  Worldwide there is a 6 to 10 ratio of fraudulent claims, with only 4 being legitimate.  So insurers have a systems bias towards not paying claims.  In Costa Rica, there were 158 complaints in 2011, a 15% rise.  The complaints in relation to non payment of claims were 40.  Most complaints were related to the insurance company response, 116.  Either no response, a delayed response or an inadequate response.  Only 2 complaints were made regarding premiums.