INS tells their Insurance brokers there would be “consequences” if they sold any other company’s products.
Every Costa Rican knows [since they can remember] the government monopoly of, oil/gas, electric, internet, and insurance has been one big headache after another. In Oct, 2007 when Costa Rica’s Free Trade Agreements (FTA) were signed, it looked like for the first time Costa Rican’s were going to get a break, when foreign companies could compete with government companies, especially for insurance. Ticos, for the first time would be able to pick a company based on service, care, quality, and cost.
Over a year later it looked like FTA was not working, then Canada’s American Life Insurance Company (ALICO) and a few others had received approval to sell in Costa Rica.
But has it happened? Well not quite as expected.
One of the first signs it was under undergoing, “Rules of Engagement” was with the new requirements for foreign residents (expats or permanent residents), who had to show proof of medical insurance to the government Caja, Costarricense de Seguro Social, which forced Expats scrambling for coverage from Instituto Nacional de Seguros, (INS), and/or Caja Costarricense de Seguro Social, (CCSS), which is government’s socialized medicine. Very few got coverage from foreign companies.
Approval of competitive insurance companies and the brokers to sell their services is progressing BUT only at a snail pace mostly due to the sudden landslide of technology paperwork needed to get approval and the stonewalling of Superintendencia General de Seguros, who, must not only approve new companies to operate in the country, but also each individual policy type. As you can imagine this has required a ton of overhead (investment) for any company, with no guarantee they would get the “thumbs up” to operate in Costa Rica.
Almost three years after FTA was signed, there is only one small Costa Rican company authorized and only a few multinationals that had been approved sell insurance.
One of the reason why there is not more companies, the “Rules of Engagement,” keep changing causing companies and brokers to increase their investment, and/or just quit, when INS continually requires/demands more trivial documents, such as, personal reports of corporate leaders.
In the past, brokers only sold insurance from INS, so their overhead was high and profits were very small. With FTA, this gave the opportunely to sell insurance from different companies. At first, many got excited, because, like the U.S. companies some offered a percentage on what policy was sold, so brokers now had a chance to make bigger colones than what they received from INS. But then came [another Rules of Engagement] under the regulatory oversight of INS. Unfortunately, brokers like Banco Nacional and Banco de Costa Rica, who have always sold INS policies, where were hit with the final Rule of Engagement from INS last month.
INS sent a letter to all its agents saying, there would be “consequences” if they sold any other company’s products.
What’s that you say? You read me right!
You can almost hear all the cursing on that one. One remarked, “I’ve moved my desk out of the office, sold my shares, resigned from the board.”
Carlos Benavides of the UNISERSE agency said his company, one of the largest in the country, who is under contract with the Instituto Nacional de Seguros until the end of 2011, may not be venturing into brokerage territory before then. He thinks many of the 70 present Instituto Nacional de Seguros agencies will disappear in the next few years, as overhead is too high to compete selling just Instituto Nacional de Seguros products.
It is pretty obvious that any broker firm, who is not a agency of INS will not be acceptable in the new environment and this, sorry to say, iss not a good thing!
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