Costa Rica's Insurance Market Poised for Growth

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In a detailed, interview packed article, El Financero laid out the case for strong growth in the insurance market for 2011.   INS continues to prepare to face competition as the market becomes more fluid, while companies entering the market will be aggressively pursuing new clients and intermediaries to bring them in.

Since the market was "opened" in 2008, there has been a fairly long period of structuring.  SUGESE had to be created and the regulations regarding the operation of companies in the market detailed based on the guidelines included in the Insurance Law. The publication interviewed executives from a number of companies to get a feel for the direction of the market in 2011.

INS continues to be the dominant operator, with the most policies, agents and branch offices, as well with the highest sales volume.  Its president, Guillermo Constenla, is focusing on beating the competition back one client at a time.  According to INS, the presence of competitors is already making an impact, and INS agents must do better than competing companies in price and service.  Rates have come down on many policies INS offers.

Also in Seguros El Magisterio, which was legally operating in the country insuring educators, the general manager Rafael Monge believes that insurance sales are moving and that new competitors are looking for niches to dominate, since it is difficult to compete with INS head on, particularly in terms of administrative infrastructure and commercialization.

For others though, the market has not yet opened in practical terms. Luis Young, general manager at ALICO, and Rodrigo Peralta of ASSA, told El Financiero that the market is lagging because agents are tied up in contracts of exclusivity with INS through 2012, so they are not able to sell other policies.

Kevin Lucas, general manager of ADISA (Aseguradora del Istmo S.A.) believes that a long road must be traveled before the market is truly competitive.  He cited the accreditation phase, approval of specific policies, the training of sales forces and the branding of private companies as obstacles that must be overcome before the market can be called an open one, where the consumer has a true variety of policies to choose from to meet their needs.

El Financiero believes that despite a slow start, 2011 will be a year of growth for the insurance companies and brokers, with new policies that have received approval coming into the market.