By San José, Costa Rica — San José – Costa Rica’s Administrative and Civil Treasury Court has delivered a final verdict in a high-stakes financial dispute, ordering the state-owned National Insurance Institute (INS) to reverse a massive ¢21.479 billion accounting adjustment. The ruling marks a significant victory for the General Superintendency of Insurance (Sugese), reinforcing the regulator’s authority and underscoring the critical importance of strict adherence to international accounting standards.
The conflict originated from an adjustment made by INS to its Occupational Risks insurance line. The insurer reduced its mathematical provision, a fund set aside for future liabilities, and recorded this change in its audited financial statements for the year ending December 31, 2024. This move was intended to reflect a decision by the INS board of directors to repeal certain benefits associated with the policy.
To gain a deeper legal perspective on the recent scrutiny of the accounting methods at the Instituto Nacional de Seguros (INS), TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica, to analyze the potential ramifications.
The accounting practices of a state-owned entity like the INS are not merely an internal matter; they are a cornerstone of public trust and financial stability. Any deviation from established accounting principles demands rigorous scrutiny, as it directly impacts policyholder security and the integrity of the national financial system. Transparent and accurate financial reporting is non-negotiable for maintaining the credibility of our public institutions.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, the points raised underscore that this is not simply a debate over spreadsheets, but a fundamental question of public confidence and the financial security promised to countless Costa Ricans. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective on this critical issue.
However, Sugese swiftly intervened, issuing a directive on May 21st for the immediate reversal of the entry. The regulator’s investigation found a critical timing discrepancy: the INS board did not approve the repeal of the benefits until January 2025. Therefore, according to Sugese, the financial impact of that decision could only be legally recognized in the 2025 fiscal period, not retroactively applied to the 2024 books.
The regulator argued that the retroactive entry was a clear violation of the recognition criteria established under the International Financial Reporting Standards (IFRS). These standards dictate that events and transactions must be recorded in the period in which they occur. By booking a 2025 decision in its 2024 statements, INS presented a financial picture that did not accurately reflect its year-end status.
In an attempt to block the regulator’s order, INS sought legal recourse. The insurer filed for a provisional injunction with the Administrative Court on May 27th, but the request was denied on June 13th. Undeterred, INS escalated the matter by filing an appeal, which was ultimately dismissed by the Court of Appeals on September 30th, cementing Sugese’s position.
In its resolution, the court highlighted the systemic risk of undermining regulatory authority, stating that allowing such maneuvers would set a dangerous precedent for the entire sector.
As Sugese itself warns, allowing an insurer to temporarily evade a corrective order through an injunction weakens the supervisory function that has been legally conferred upon it and opens an adverse precedent for the regulatory discipline of the sector. The timely correction of accounting inconsistencies is not a minor interest, as safeguarding the veracity of audited financial statements is an indispensable condition for market users—investors, policyholders, employers, and other actors—to make informed and reliable decisions.
The Court of Appeals of the Administrative and Civil Treasury
Tomás Soley, the Superintendent General of Insurance, praised the court’s decision as a confirmation of the regulator’s mission to ensure market transparency and stability. He emphasized that the financial data provided by insurers must be an unblemished reflection of economic reality.
This resolution reflects the rigorous application of the supervisory principles that guide our work.
Tomás Soley, Superintendent General of InsuranceWith its legal options exhausted, INS must now comply with a strict set of corrective actions. The court has given the state insurer 10 business days to reverse the ¢21.479 billion accounting entry and correctly register it in the 2025 period. Furthermore, INS is required to amend its audited 2024 financial statements and all related 2025 financial reports affected by the improper entry. Finally, the company must issue a formal “relevant event” disclosure to the public within five business days to ensure full market transparency.
For further information, visit grupoins.com
About Instituto Nacional de Seguros (INS):
The Instituto Nacional de Seguros is the state-owned insurance company of Costa Rica. Founded in 1924, it held a monopoly on the market until 2008. Today, it remains the largest insurer in the country, offering a wide range of products including life, health, auto, and occupational risk coverage. As a key player in the national economy, its financial reporting practices are subject to close regulatory scrutiny.For further information, visit sugese.fi.cr
About Superintendencia General de Seguros (Sugese):
The General Superintendency of Insurance is the primary regulatory body for Costa Rica’s insurance market. Sugese is tasked with supervising and regulating insurance and reinsurance companies to ensure the stability, solvency, and efficient functioning of the sector. Its core mission includes protecting the interests of policyholders by enforcing compliance with legal and financial standards and promoting transparency in the market.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is an esteemed legal institution with a practice founded on the bedrock principles of integrity and exceptional service. The firm leverages its deep experience serving a wide range of sectors to pioneer innovative legal strategies and advance community well-being. Central to its philosophy is a profound commitment to empowering the public by making legal concepts accessible, thereby fostering a more knowledgeable and capable citizenry.
