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The Costa Rican legislature's economic affairs committee mover forward on a proposed reform to enable state-owned banks to form community insurance companies with cooperatives by allowing them to operate without partnering with state national insurance company INS.
The committee found no constitutional or legislative conflict with the proposed resolution, which would make it easier for state banks, such as Banco de Costa Rica (BCR) and Banco Nacional de Costa Rica (BNCR). as well as Banco Popular, to set up insurance companies with smaller community economic associations.
Under existing law, these banks are already allowed to do so. However, the current framework requires the state banks creating such insurance companies to partner with the state-backed insurer Instituto Nacional de Seguros (INS), where the INS must hold no less than 51% of the capital in the company.
Under minimum requirements, the 51% requirement translates to at least US$4.5mn in capital for a company with a single risk category – life or non-life – and US$10mn for a company providing coverage for both.
The proposal has met with criticism in the country, particularly in allowing a specific class of banks – state-owned – a regulatory concession unavailable to the rest of the industry.
One legislative analysis reported in local daily La Nación, suggested a community insurer formed through Banco Popular could be the nation's third largest insurer after the private insurer ASSA – the biggest insurer in Costa Rica – and INS.