Costa Rican President Dr. Oscar Arias Sanchez recently signed into law the new Ley Reguladora del Mercado de Seguros, thereby ending the Instituto Nacional de Seguros’ (INS) more than eighty-year-old monopoly over the Costa Rican insurance business. The Consejo Nacional de Supervision del Sistema Financiero (CONASSIF) is charged with establishing an insurance regulatory authority and implementing the other mandates of the new law. CONASSIF has already indicated that the market should be open to competition and the regulator should be prepared to accept applications for insurance business by the end of September 2008 at the latest.
Although CONASSIF will also be responsible for creating regulations governing the requirements for entities applying to carry on insurance business in Costa Rica, several basic tenets are already set forth in the new law: (1) Domestic and foreign companies (with local branches) will be permitted to operate insurance business in Costa Rica; (2) CONASSIF will issue obligatory investment regulations governing all insurers; (3) Companies seeking to sell personal lines insurance will be required to have minimum operating capital of $3 million; (4) Companies wishing to operate as reinsurers will be required to have minimum capital of $10 million; and (5) 4% of all direct premiums from all lines of insurance will be used to finance the Costa Rican fire departments. Notably, the minimum capital requirements contained in the new law are far lower than those contemplated in earlier drafts, which ranged from $10 million to $40 million.
The new law also grants certain new freedoms to the INS, including the ability to expand its operations into foreign markets.
For a copy of the draft law governing the insurance market, please click here. For a copy of the draft law governing insurance contracts, please click here. Please be advised that the final versions of these laws have not yet been officially published in La Gaceta and certain aspects of the draft laws have changed from the attached versions.
If you would be interested in learning more about the Costa Rica or other Latin American (re)insurance markets and/or regulatory environments, please click the “Email the Editor” button and provide your contact information for follow-up by an EAPD attorney. Additionally, if you would like us to send you the final versions of the laws once published, please let us know.