Costa Rica's insurance market to double in size - study

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Tuesday, October 14, 2014

Costa Rica's insurance market will double in size over the next six years and post the highest premium growth in Central America, said local daily El Financiero, citing a study by analyst Enrique López Peña.

The insurance sector is expected to expand 135% in the period, reaching US$2.77bn in premiums by 2020, compared to growth of 97% in Panama, according to the report.

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Costa Rica's insurance industry is less dependent on the reinsurance sector than other markets, enabling it to retain more risk and generate greater reserves, investment and profits, said López.

Despite a relatively high claims ratio of 54%, the sector has the highest retention rate in Central America at 78.6%, according to the study.

But administration costs are high: 28% of written premiums at end-2013, compared to a regional average of around 12%.

Costa Rica's insurance industry was opened up to private players in 2008, following 84 years of state monopoly, although the sector is still dominated by state insurer INS.

Total written premiums in the first six months of 2014 came to US$567mn, up 12.2% year-on-year, according to figures from insurance regulator Sugese.

State insurer INS accounted for 86.1% of the total with US$488mn in premiums, up 7.72%.

Private insurers saw premiums grow 50.7% to US$78.7mn during the period.

The workplace risk segment accounted for the biggest share of premiums – US$169mn – and was the fastest growing, up from US$124mn in the same period last year.

After INS, the biggest insurers were Pan American Life, with 5.1% of the market; Assa Compañia de Seguros (3.2%), Mapfre Costa Rica (2.3%), and Aseguradora de Istmo, or Adisa (1.5%).