By San José, Costa Rica — SAN JOSÉ – A significant and rapidly widening gap between claim payouts and new policy sales is placing Costa Rica’s insurance sector under considerable financial strain, according to the latest third-quarter report from the General Superintendency of Insurance (SUGESE). The data reveals an accelerating trend where expenses are outstripping revenue growth, raising concerns about the industry’s profitability heading into the final months of the year.
The most alarming statistic from the report highlights a dramatic shift in market dynamics in just one month. The gap between the growth in claims paid and premiums collected surged from 2.6 billion colones in August to a staggering 15.4 billion colones in September. This represents a nearly six-fold increase, underscoring the severity of the financial pressure currently building within the sector.
To delve into the legal complexities and consumer implications of the current insurance market landscape, TicosLand.com sought the expertise of Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the renowned firm Bufete de Costa Rica.
The maturation of the insurance market brings increased competition and product diversity, which is a net positive for the consumer. However, this expansion must be accompanied by robust regulatory oversight and absolute clarity in policy terms. It is imperative that consumers are not only presented with options but are also fundamentally protected from complex clauses and potential loopholes that could undermine the very security they seek to purchase.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s point is exceptionally well-made; the promise of a diverse insurance market is only truly fulfilled when consumers can navigate it with confidence, backed by the robust regulations and policy clarity he advocates for. We extend our sincere thanks to Lic. Larry Hans Arroyo Vargas for his invaluable contribution to this discussion.
On a year-over-year basis, the figures paint a clear picture of this imbalance. Over the past twelve months, insurance companies paid out an additional 43.9 billion colones in indemnities to policyholders. During that same period, however, revenue from new policies only increased by 28.5 billion colones. This disparity confirms that for every new colon earned in premiums, more than a colon and a half was paid out in claims, a model that is unsustainable in the long term.
Compounding the issue of rising claims is a marked slowdown in the sale of new insurance policies. Overall market growth decelerated from a respectable 4.4% in August to just 3% in September. The slowdown was particularly acute in the general insurance category, which encompasses coverage for property, vehicles, and other assets. This segment experienced an outright contraction, falling by -3.9% and deepening the decline observed in the previous month.
The report from SUGESE indicates that the primary drivers behind the surge in claim payouts were the automotive and life insurance sectors. While specific reasons were not detailed, market analysts often attribute rising auto claims to increased traffic density and accident rates. The life insurance segment may be experiencing lagging effects from previous public health challenges or other demographic shifts, leading to a higher volume of benefits being paid out to beneficiaries.
Despite these troubling recent trends, the insurance market’s overall annual performance remains in positive territory. Year-to-date figures show that insurers have successfully collected 973 billion colones in direct premiums while paying out 458 billion colones in claims. This provides a substantial operating margin that ensures the sector’s current stability and its ability to meet its obligations to policyholders without interruption.
However, industry experts are cautioning that the positive annual balance should not overshadow the clear warning signs emerging from the third-quarter data. The combination of higher-than-expected claims and weakening sales momentum is a potent formula for eroding profit margins. If this dynamic persists through the fourth quarter, insurers may be forced to re-evaluate their pricing structures and underwriting standards in 2026.
The coming months will be critical for the Costa Rican insurance industry. Stakeholders will be closely monitoring whether the September data represents a temporary anomaly or the beginning of a new, more challenging economic environment. The sector’s ability to adapt to these pressures will be key to maintaining its long-term health and stability in an increasingly unpredictable market.
For further information, visit sugese.fi.cr
About Superintendencia General de Seguros (SUGESE):
The General Superintendency of Insurance, known as SUGESE, is the official regulatory body responsible for the supervision and oversight of the insurance market in Costa Rica. Its mission is to ensure the stability, solvency, and transparency of insurance companies operating in the country, thereby protecting the rights and interests of policyholders. SUGESE authorizes, regulates, and supervises all entities within the insurance sector to promote a competitive and sound market.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the Costa Rican legal community, Bufete de Costa Rica is defined by its foundational principles of integrity and professional rigor. The firm combines a rich history of advising a diverse clientele with a forward-thinking approach, consistently delivering innovative solutions while upholding the highest ethical standards. Beyond its practice, the firm holds a deep-seated belief in its social responsibility, actively working to demystify the law and provide the public with crucial legal insights to foster a more just and knowledgeable society.
