Eduardo Recinos, Insurance Director for Fitch Centroamerica, reportedly commented recently that the true volume of insurance sales in Costa Rica is obscured by illegal sale of foreign insurance, and that he does not expect either the opening of the Costa Rican insurance market to private competition or the creation of an insurance regulator to eradicate the problem.  Mr. Recinos further reportedly commented that the lack of competition in the market due to the long-standing government monopoly, together with the relative wealth and sophistication of the country’s population, has created a grey market in foreign insurance that may be difficult to eliminate.

As to Fitch Centroamerica’s other expectations for the Costa Rican insurance market going forward, Mr. Recinos reportedly stated as follows: (1) Fitch expects a price war as new competitors enter the market, which may leave the former monopoly holder, the Instituto Nacional de Seguros (INS), vulnerable as prices decline and competition increases; (2) the opening of the obligatory insurance market to private competition in 2011 will likely cause further loss of premium for the INS; and (3) Fitch does not consider the INS’ current premiums in the market to be artificially inflated.

For a copy of the recent Fitch report on the Costa Rican insurance market, please click here.

For our further coverage regarding the Costa Rican insurance market, please click here.

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