San José, Costa Rica, since 1956

Insurance companies still wading through bureaucracy

Here is an update on the status of insurance companies entering the sluggishly opening market in Costa Rica. But first, some background information on the process insurance companies must go through to obtain an operating license here. This consists of a complex bureaucratic maze, greatly summarized as follows:

1. An application must be presented to the Insurance Superintendency (SUGESE). The detail required is incredible – even the family trees of the shareholders, directors and executives!

2. When an application is to the satisfaction of SUGESE, it issues an “autorización condicionada” and the applicant is given two months to fulfill the promises made in the application.

3. When all is in place, SUGESE will issue a “licencia de funcionamiento” – license to operate the business.

4. Insurance companies must obtain from SUGESE the approval of each product they wish to offer: contract conditions, monetary viability, reserves to be established, pricing, etc.

Following is the status of each insurance company:

1. The National Insurance Institute (INS), the ex-monopoly, has more than a hundred products approved by SUGESE in the lines of general insurance (auto, fire, liability, theft, etc.) and personal insurance (life, medical, accident, etc.). To be competitive in lines where there is competition, INS has reduced premiums, improved some products and in general is smartening up the service it provides.

2. Seguros del Magisterio, in operation since 1920, was always the exception to the monopoly because it offers only personal insurance products specialized for members of the teachers’ unions.

3. Mapfre, a world-class Spanish insurer, plans to offer a complete line of general insurance products. This company began selling auto insurance in June 2010, but has not been able to get SUGESE’s approval for other policies. Its auto insurance costs about the same as INS’s for cars up to 5 years old, but its policy conditions are better. For cars 6 to 10 years old, Mapfre is slightly more expensive than INS. It will not insure cars over 10 years old, or commercial vehicles. Customer service is excellent. Important: No-claims discounts granted by INS carry over to Mapfre if the client changes insurer.

4. Alico, a well-regarded U.S.-based subsidiary of MetLife, offers group life and medical insurance. It dos not plan to offer individual products.

5. Pan-American Life Insurance is offering group life and medical products, and expects to get SUGESE’s approval to offer individual policies in the first quarter of 2011.

6. ASSA, a subsidiary of a solid Panamanian company with offices throughout Central America, offers general and personal insurance products. ASSA has 34 approved products. Its big seller is fire and natural disaster insurance, for which its products are similar to INS’s but cheaper – sometimes a lot cheaper. Like Mapfre, ASSA seems to want the cream of the crop, and is quite picky about what it insures, rejecting applications where buildings are close to a river, on a steepish hill, etc.

7. Aseguradora del Istmo, an important Panamanian company, has its licencia de funcionamiento but has not had any products approved by SUGESE. It plans to offer personal insurance.

8. Seguros Bolívar of Colombia received its autorización condicionada on May 13, 2010, but still has not obtained its licencia de funcionamiento. It plans to offer general and personal insurance.

9. Quálitas, a Mexican company specializing in auto insurance, received its autorización condicionada on Aug. 13, 2010, but its licencia de funcionamiento is still pending. It plans to offer general insurance.

10. Best Meridian Insurance Company, based in the U.S. state of Florida, plans to offer personal insurance lines. It has not yet received its licencia de funcionamiento.

11. Atlantic Southern Insurance Company, based in Puerto Rico and the Caribbean, specializes in personal insurance. It has yet to receive its licencia de funcionamiento.

In summary:

–As things are going, there will be 11 insurance companies in Costa Rica.

–Six insurance companies are licensed to operate and have products approved by SUGESE.

–One of these companies (Magisterio) is highly specialized and should be taken into account only by members of teachers’ unions.

–One company (Istmo) is licensed to operate but has no approved products to offer.

–Four companies have autorización condicionada but have not received a licencia de funcionamiento. Once they do, it will take time for them to get their products vetted by SUGESE.

–Of the 11 companies, three (INS, ASSA and Bolívar) will offer general and personal insurance, two (Mapfre and Quálitas) will offer general insurance only, and six (Magisterio, Alico, Pan-American, Istmo, Best Meridian and Atlantic Southern) will offer personal insurance.

–The three big sellers are auto insurance, fire insurance and medical insurance.

–Although Mapfre and ASSA have products approved by SUGESE to compete with INS’s auto insurance, only Mapfre’s is on the market.

–Only ASSA’s fire policy is actively competing with INS.

–Pan-American and Alico have been authorized to sell group medical insurance in competition with INS. The only individual medical policy available is still INS’s.

Although SUGESE suggests that its lengthy approval procedures are because of its diligence in protecting the public against failing insurance companies and nonperforming policies, some believe the superintendency is pedaling slowly to allow INS time to shape up and face competition.

The opinions and viewpoints expressed are those of the writer. Our purpose is to give the reader a better understanding of insurance in Costa Rica. For more info, contact David Garrett at 2233-9520 or

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