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Insurance in Costa Rica
The Law of Monopolies of the Instituto Nacional
de Seguros (National Insurance Institute),
was passed in 1924, and it stated that insurance
was to be handled as a state monopoly. This
is still the case for insurance, telecommunications
and the socialized medical system. For people
not used to state monopolies, this must sound
awful, and it must immediately conjure up
images of mounds of red tape and of government
officials who spend their time filing their
nails or at eternal coffee breaks. Even though
reality does include some of these depressing
pictures, it also offers various benefits
and a recent improvement in efficiency.
The INS is a financially solid institution,
which is not likely to go bankrupt in the
event of a natural catastrophe such as earthquakes
or floods. It’s a large institution, with
2500 employees and a Board of Directors that
oversees its functions. Since it’s a monopoly,
only the INS and its agents are allowed to
sell and handle insurance in Costa Rica.
This law has sanctioned various “entrepreneurs”
who have tried selling foreign or private
insurance.
The premiums vary from one kind of policy
to the other; for example, car insurance
is high, while home fire or theft insurance
is low (when compared to other countries).
The cheaper policies are subsidized by other
types of insurance, a fact that can be considered
an advantage of the monopoly over private
insurance. However, even this great benefit
doesn’t seem to make up for the slow bureaucratic
system and the lack of service-oriented workers.
Unenthusiastic workers is a reason why people
in Costa Rica prefer to have an insurance
agent, who is often more concerned about
providing excellent service to his/her customers.
There are some components of Costa Rican
insurance policies that everyone should be
familiar with. First of all, there is the
inflationary clause. Due to constant inflation,
the INS applies an automatic increase in
the amount insured; some policies, like the
ones for home fire, have an optional inflationary
clause. Secondly, there are grace periods
which allow a late payment and a renewal
of the policy. Policies that are paid yearly
have a grace period of 30 days, while those
paid twice a year have a 15 day period, and
so forth. When the client doesn’t pay after
the grace period, the policy will expire.
The reinstatement of a policy is a complicated
affair, which includes the obligatory visit
of an agent who will assess what is being
insured once again. The suspension of a policy
is not possible in Costa Rica; in some countries
people ask for a temporary suspension, when
they feel that they won’t need the policy
for a certain amount of time. Last but not
least, in order to cancel a policy, one must
write the INS, include the policy number,
and ask for a reimbursement; there are some
restrictions that apply that make it better
for people to transfer their policy to another
person, instead of canceling it.
The main types of policies are offered in
Costa Rica, even if they aren’t as varied
or competitive as in other countries. The
social interest policies are directly between
the INS and the client, and they are usually
much cheaper than in other countries. These
policies are the following: obligatory auto
insurance, home fire and home theft insurance.
Worker’s compensation is also an obligatory
insurance which covers work related accidents
during the job or while travelling to or
from the workplace. The last social interest
policy is crop insurance, which obviously
helps farmers whose crops have been ruined
by natural disasters.
Among the “commercial” policies are the following:
auto, fire, theft, liability, medical, life,
general accident, student accident, traveller’s,
electric equipment, and named peril insurance.
The latter can best be defined as a policy
that is used to cover something that can’t
be covered through other types of insurance.
This policy covers the following events:
fire & lightning, earthquakes, cyclones
& hurricanes, floods, robbery, mutinies
& insurrection, vandalism and explosions.
So, as you can see, even though the INS is
a state monopoly, it covers just about every
type of possible situation that calls for
a policy. There has been a lot of talk about
the privatization or disintegration of this
state monopoly, which is the result of the
neo-liberal tendency that the Costa Rican
government has been embracing recently. Only
time will tell if the INS continues to maintain
a solitary rule over all insurance in Costa
Rica.
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