Foreign Companies Take Note: Costa Rican Regulator Clarifies Insurance Laws and Regulations Regarding Prohibitions Against Unauthorized Insurance Business, Cross-Border Insurance Exception, Surplus Lines and 4% Premium
As discussed here, the government monopoly over the Costa Rican insurance market was ended in the Fall of 2008. Soon thereafter, the Costa Rican government began promulgating regulations governing the newly opened market (see here).
The interim regulator of the Costa Rican (re)insurance market, the Superintendencia de Pensiones, recently issued a technical note providing further guidance as to several regulatory issues of significant importance to foreign (re)insurance companies.
The Ley Reguladora del Mercado de Seguros applies to any person involved in the development or realization of any insurance activities, whether in the nature of insurance, reinsurance, intermediary or auxiliary services. The Law applies to such activity whether it occurs within the Costa Rican territory or from abroad directed toward Costa Rica and whether such activities are conducted directly or through intermediaries.
The public offering of insurance services, which is prohibited in the absence of proper authorization or an applicable exemption, includes any activity that procures the sale of an insurance policy or provides specific or concrete information concerning a particular insurance policy.
Any provider of cross-border insurance services that includes a risk within Costa Rica must register with the Superintendency. This requirement does not apply to providers of cross-border reinsurance or retrocession, reinsurance intermediary services or auxiliary reinsurance service--such entities may contract with authorized Costa Rican insurers when contacted directly by such authorized companies.
No company may commercialize or otherwise market cross-border insurance services in Costa Rica unless the policies in question have been registered with the Superintendency. Registration of policies is only permitted by the Superintendency if such policies have been registered in the company’s home jurisdiction.
The only cross-border direct insurance services currently permitted by law in Costa Rica are those established by the CAFTA-DR treaty. As concerns direct insurance, said treaty applies only to space, maritime transport and commercial aviation insurance and only to member countries.
Surplus lines insurance may only be purchased after local vetting and therefore may not be publicized in Costa Rica and may only be offered through brokers.
The 4% premium surcharge on all insurance policies for the benefit of the Costa Rican Firemen’s Fund applies to all policies, including cross-border and surplus lines policies.
For a copy of the Technical Note, please click here.
For our further coverage regarding of the Costa Rican insurance market, please click here.
If you would be interested in learning more about the Costa Rican or other Latin American (re)insurance markets and/or regulatory environments, please contact Mach Millett at Edwards Angell Palmer & Dodge.
© Copyright 2009 by Edwards Angell Palmer and Dodge LLP. All rights reserved. Reprinted with permission. This blog originally appeared on the InsureReinsure Blog. The InsureReinsure Blog is one of the Insurance Law Center’s Top 50 Insurance Blogs for 2009. The Top 50 Insurance Blogs may be found here.