Insurance oportunities at a glance:

(July 1, 2008) The Asamblea Legislativa today voted for the second and final time to eliminate the monopoly of the national insurance company.

The 31-12 vote was expected, and the breaking of the Instituto Nacional de Seguros monopoly was foreseen by the free trade treaty.

The Sala IV constitutional course has reviewed the bill and found no legal flaws. Lawmakers delayed action until they heard from the court.

Lawmakers of the Partido Acción Ciudadana, long-time foes of the free trade treaty, opposed the bill. Orlando Hernández of that party said that the measure has major implications for the institute.

Oscar Núñez, head of the government's Partido Liberación Nacional in the legislature, said that the insurance institute will continue to be an important service for Costa Ricans but that it will have to compete with other firms.

It was April 24 when lawmakers took the first major step to end the state monopoly over the sale of insurance. The legislation received the first of two required approvals then.

The legislation allows foreign insurance companies to offer their services in Costa Rica. At the time of the vote only the Instituto Nacional de Seguros could do that.

Lawmakers clashed then over the prohibition in the measure that would prevent the Instituto Nacional de Seguros from offering its services in other countries. The measure is one of those dozen enabling bills for the free trade treaty with the United States. Under the treaty, the institute could sell insurance in the other signatory nations. But this is specifically forbidden by the current legislation.

Lawmakers also expressed concern over the future of the firemen, the Cuerpo de Bomberos. The fire budget used to comes from the institute. An alternate source of funding, a small tx. allowed the fire corps to become free of the institute in a ceremony in September.

Despite the second approval of the measure, foreign insurance companies cannot open up shop quickly. The country has to set up the regulatory structure for this industry.

The Instituto Nacional de Seguros sells a limited number of policies. Costa Ricans do not have complex choices in insurance as do citizens of other countries. So consumers here are not used to dealing with the subtle differences in policies.


Superintendent named for insurance regulator

By Dennis Rogers
Special to The CAFTA Report

Costa Rica’s newly-opened insurance industry has a supervisory agency in operation, dubbed the Superintendencia General de Seguros or the insurance superintendent general. Economist Tomás Soley took charge of the agency Oct. 20. He will oversee the development of the regulatory operation for Costa Rica’s newly opened insurance market.

As a result of the Central American free trade agreement with the United States, Costa Rica was obliged to remove the monopoly enjoyed by the Instituto Nacional de Seguros since 1924. In theory, the market is no longer a monopoly now that the enabling legislation has passed the National Assembly, but until the administrative structure is established, the institute will be the only operator.

Some aspects will still be controlled by the government, with workman’s comp coverage and the small obligatory liability coverage included in the annual vehicle registration not planned for wide sale until 2011.

The new agency, to be known by the usual alphabet soup of SUGESE, will be overseen by the Superintendencia de Pensiones, known informally as SUPEN, while the final regulations are established and the agency takes shape. According to Wilbert Quesada who coordinates the work of establishing the new regulator, At present, there are four or five pension agency employees working on the matter now and has budgeted about 20 positions in the independent entity.

However, Quesada said “anybody can apply now for approval though we don’t have any formal applications yet.” He said several companies with foreign capital have expressed interest in the local market.

The full text of the regulatory plan as passed by the legislature (in Spanish) is available HERE!