San José, Costa Rica, since 1956

Prepayment of Premiums Not So Easy

Some days ago,my favorite fictional client, Mrs. Pendragon, arrived at my office.

She parked her chinless husband Willy in the foyer, leaving him staring vacantly into space, sniffed the coffee pot disapprovingly and sailed past the windmilling receptionist into my inner sanctum.

“Mr. Garrett!” she said accusingly, her china-doll eyes boring into me like a schoolteacher’s. “I have had to come in person to see how much to pay you for the renewal of my policies, because you failed to notify me.”

“But Mrs. Pendragon,” I stuttered, feverishly cranking my computer, “your premiums are not due yet! Your policies expire in January, February and March, and we don’t find out from INS (the National Insurance Institute) exactly how much a renewal premium is until the last week of the preceding month, so we couldn’t notify you.”

“Well,” she said, “it’s not good enough! I’m going to Europe again this year for three months, and I can’t trust Willy to do anything right without my direct supervision, so I want to pay now. And it shouldn’t be too hard for you to estimate the amounts.

So calculate how much, add a little bit on for safety, and tell me how much to make out the check for. And can you explain to me, lucidly, why my premiums keep going up and down all the time?”

“It’s like this, Mrs. Pendragon,” I said.

“The auto policy premiums go up or down depending on whether INS has granted you a bonus for having had no claims, or slapped a surcharge on your premium for having claimed a lot. The home fire and natural disaster policy, which is in colones, increases automatically every year to compensate for inflation; and the medical insurance premium goes up along with your age – as you get older, you have a higher premium.”

“Well, I wouldn’t be surprised if there were a surcharge on the policy for the Mercedes,” she huffed. “Willy keeps crashing the thing when he doesn’t do what I tell him, so we’ve had some claims. Anyway, tell me quickly how much to make out a check for.

I’m in a hurry!”

I coughed nervously. “As a matter of fact, Mrs. Pendragon, I can’t take your money right now. You see, INS has a regulation stipulating that all its agencies and agents must deliver every premium received within 72 hours. And we can’t pay INS your premiums because they are not yet due, and the amounts haven’t been confirmed, as I just told you.”

“Well, why can’t I just postdate the check, and you promise not to cash it until the premiums are due?” she asked.

“Sorry, Mrs. Pendragon. Upon receiving money or checks, we have to give you a receipt. The receipts are numbered, and as INS audits us agents from time to time to keep us honest, receiving postdated checks is out,” I explained. “No, we can’t take your money.”

“All right then!” she blustered. “I’ll give you my credit card number, and when the exact premiums are determined, you can charge them to my card. Now, why didn’t you think of that?”

“Weeeell, that might work, sort of,” I said.

“The only proviso is that for most credit cards to work in this country a signed stub is required. So, if you like, you can sign three blank credit card stubs and I’ll keep them in your file and use them as required to renew your policies.”

“All right, let’s do that, then,” she announced. “It means trusting you, and I don’t usually trust anyone, but it seems to be the only way.Why doesn’t INS trust you?”

“We’ve been their agents for only 27 years,” I explained. “By the way, Mrs. Pendragon, would you like to buy some travel insurance for your trip?”

“What, and have Willy collect $200,000 if my plane falls out of the sky? No way!

He wouldn’t know what to do with the money.”

I heard a gentle sigh from the foyer.

The writer’s purpose is to give you a better understanding of insurance in Costa Rica. The opinions and viewpoints are his, and do not necessarily represent the official position of the National Insurance Institute (INS). For more info, see, call David Garrett at 233-2455, or write


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