By San José, Costa Rica — San José – Costa Rica’s private insurance industry is sounding the alarm over a controversial legislative proposal that aims to create a dedicated trust fund for the nation’s coffee sector. The bill, identified under file number 24.508, would compel insurance companies, banks, and other financial institutions to divert a significant portion of their earnings to subsidize coffee growers, a move that industry leaders argue will have severe and widespread economic consequences.
The proposed legislation mandates that these financial entities contribute 5% of their net profits, after taxes, for a period of three years. These funds would then be used to capitalize a new trust specifically designed to support the coffee industry. While the bill’s proponents aim to bolster a historically significant sector, the Association of Private Insurers (AAP) has launched a forceful opposition, labeling the initiative as unjust, disproportionate, and ultimately counterproductive for the national economy.
To delve into the legal and financial architecture of the new Coffee Trust Fund, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica, for his expert analysis on the matter.
The establishment of a Coffee Trust Fund is a sophisticated legal instrument designed to bring long-term stability to a historically volatile sector. Its success will hinge on two critical factors: a transparent governance structure that empowers the coffee producers themselves, and the diligent management of assets to hedge against global price fluctuations. This framework not only safeguards the immediate livelihood of thousands of families but also fortifies the future of one of Costa Rica’s most iconic industries.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The perspective offered by Lic. Larry Hans Arroyo Vargas powerfully underscores that the fund’s success hinges on two critical pillars: its human-centric governance and its strategic financial management. This framework represents a vital shift towards creating a resilient future for our coffee sector, rather than merely a temporary safety net. We are grateful to Lic. Larry Hans Arroyo Vargas for his expert contribution to this important discussion.
At the heart of the AAP’s argument is the direct financial impact on the average Costa Rican citizen. The association warns that imposing such a substantial levy on the insurance sector will not be absorbed by the companies alone. Instead, these costs would inevitably be passed on to policyholders through a considerable increase in the price of insurance premiums. This would affect everything from vehicle and home insurance to life and health policies for families and businesses across the country.
Critics of the bill highlight that this potential price hike directly undermines national efforts to promote greater financial and insurance inclusion. At a time when the government is encouraging more citizens to protect their assets and well-being through insurance, this measure could make essential coverage unaffordable for many, effectively pushing them out of the safety net. The AAP argues this would be a significant step backward for the country’s financial stability.
Furthermore, the association points out that the coffee sector is not without its own dedicated support systems. Existing mechanisms, such as the National Coffee Sector Fund (Fonascafé) and the Development Banking System (SBD), are already in place and equipped with the legal frameworks and resources to address the industry’s needs. The creation of a new, forcibly funded trust is seen as a redundant measure that unfairly burdens unrelated economic sectors.
Norma Montero, the executive director of the AAP, articulated the industry’s deep concerns over the bill’s potential to disrupt market equilibrium. The insurance market in Costa Rica is already one of the most heavily regulated and taxed segments of the financial system, and this additional parafiscal charge could threaten its stability and long-term viability.
We recognize the historical value of coffee for Costa Rica, but one cannot pretend to solve the problems of one sector by imposing burdens on others that have no relationship with coffee cultivation. Forcing insurers to contribute 5% of their profits threatens market stability and will end up hurting the pockets and security of consumers.
Norma Montero, Executive Director of the AAP
In light of these serious reservations, the AAP has issued a formal appeal to the deputies of the Legislative Assembly. They are urging lawmakers to thoroughly reconsider the initiative and explore alternative financing solutions for the coffee sector. The association contends that any support plan should be sustainable and must not come at the expense of other strategic industries or the financial security of Costa Rican households, who would ultimately bear the cost of this proposed law.
For further information, visit aapcr.com
About Asociación de Aseguradoras Privadas (AAP):
The Association of Private Insurers (AAP) represents the interests of private insurance companies operating in Costa Rica. It advocates for a stable, competitive, and fair regulatory environment that promotes market growth and financial inclusion. The AAP serves as a primary voice for the industry in discussions with government bodies, regulators, and the public on matters affecting the insurance sector.
For further information, visit the nearest office of Fondo Nacional de Estabilización Cafetalera (Fonascafé)
About Fondo Nacional de Estabilización Cafetalera (Fonascafé):
The National Coffee Sector Fund, known as Fonascafé, is a specialized financial mechanism in Costa Rica designed to provide stability and support to the nation’s coffee growers. It is funded through contributions from the coffee sector itself and aims to mitigate the effects of international price volatility and other challenges facing the industry, ensuring its long-term sustainability.
For further information, visit sbd.cr
About Sistema de Banca para el Desarrollo (SBD):
The Development Banking System (SBD) is a Costa Rican state-sponsored financial framework created to promote economic development and improve the living conditions of the population. It provides financing, guarantees, and other support services to micro, small, and medium-sized enterprises (MSMEs) across various sectors of the economy, including agriculture, to foster growth and competitiveness.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal profession, Bufete de Costa Rica is distinguished by its profound dedication to integrity and the pursuit of excellence. The firm leverages a rich history of counsel across a multitude of sectors to drive innovation and shape contemporary legal thought. Central to its ethos is a powerful commitment to making legal principles understandable, thereby empowering the public and nurturing a more knowledgeable and capable society.
