AM Best is maintaining its stable outlook on Costa Rica’s insurance industry, citing the segment’s ongoing recovery in business volume, contained loss ratios in its non-life segment and improvement in the government’s fiscal situation.
The Best’s Market Segment Report, “Market Segment Outlook: Costa Rica Insurance,” also references countervailing factors such as a challenging economic environment that exacerbates the risks associated with rising commodity prices and inflationary pressures, along with the residual effects of the COVID-19 pandemic.
The report cites year-over-year growth of 13% in Costa Rica’s insurance premiums, which totaled CRC 1,018 billion as of December 2022. This was due primarily to the economic recovery from conditions brought on by the pandemic. As of June 2023, the market had grown 6% year-over-year, mainly due to both compulsory and voluntary insurance. The recovery in compulsory insurance is due to the loosening of restrictions imposed during the pandemic and, in the case of occupational risk insurance, the drop in unemployment, according to the report.
Costa Rica boasts a well-established regulatory framework for insurance, which is supervised by the Superintendencia General de Seguros de Costa Rica (SUGESE). That organization’s current focus is developing and marketing mass market products and creating a regulatory framework with capital restrictions similar to Solvency II. Additionally, the government has implemented measures to enhance consumer protection, including mandatory insurance coverage for vehicles.
AM Best expects Costa Rica’s insurance market to withstand the current challenges, but will continue to monitor the economic, political and regulatory landscapes for their impact on carriers.
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=337492.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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