Pandemic stalled premium growth in Costa Rica

Costa Rica’s insurance premiums reached 537bn colones (US$891mn) in July, edging up just 0.7bn colones, or 0.1%, from July 2019, according to insurance sector regulator (Sugese).

In its most recent sector data report, Sugese said the industry’s weakened performance through July was a consequence of the COVID-19 crisis, with regulator data showing annual premium growth was 5.2% in February, the month before pandemic lockdowns began.

Premiums for voluntary P&C insurance lines were up 3.4% in July or 7.4bn colones from a year before, gaining 1.3 pp in total market share to 42.0%.

Mandatory auto insurance premiums, dubbed SOA, on the other hand, dropped 1.5% or 2.3bn colones year-on-year, losing 0.8 percentage points (pp) of market share to reach 30.1% in July.

Premiums on personal voluntary lines, which include life, health, income and accidents (including auto accident coverage in addition to SOA coverage) contracted 2.6% year-on-year or just under 4.4bn colones, with market share dipping 0.5 pp to 27.9%.

Sugese added that despite the near zero annual growth in premiums seen in July, the sector performed significantly better than the general economy. Costa Rica’s GDP proxy, the IMAE monthly economic activity indicator, reached -8.1% in the month compared to July 2019.

TRAVEL INSURANCE 

The pandemic stands to shape the industry in new ways, including, for example, travel insurance lines. 

Costa Rica’s tourism sector typically represents about 5% of GDP, but it has been one of the hardest hit industries in the country.

Recovery looks to begin November 1 with the resumption of international air travel, but visitors to the country are now required to have had a recent test for the coronavirus, as well as a travel insurance policy that covers any additional accommodation or medical expenses potentially generated by the COVID-19 disease during their stay.

Such policies can be acquired by any Sugese-approved local insurer, or failing that an international insurer that can verify coverage. 

INDIVIDUAL LINES

The regulator reported that voluntary auto, life, health and fire continue to be the primary lines in the country, comprising 81% of all voluntary premiums. 

While voluntary auto insurance continued to hold more premiums than any other voluntary line with 103bn colones in July, this was a 5.0% drop from the same month of 2019.

The fastest growing line was personal income insurance (akin to unemployment insurance). This line saw the largest relative and absolute growth of any segment, increasing from 9.6bn colones in July 2019 to 17.5bn in July 2020 – an 82.5% surge likely related to interest spurred by the pandemic.

For its part, the branch with the highest proportional reduction in premiums was accidents, which decreased by 22.3% to 14.6bn colones in July. Voluntary auto insurance lines have been one of the worst hit segments globally with the pandemic.

The lines that gained market share in the period were: health (1.6 pp), fire and allied lines (1.1 pp) and income losses (2.0 pp).

MARKET PLAYERS

Sugese said the largest players in July were former state insurer INS with a 72.6% market share, ASSA with 7.4% and Pan American with 6.7% – together holding nearly 87% of sector-wide premiums.

INS actually lost 1.8 pp of market share in the July annual comparison, and Sugese reported that the largest increase in market share occurred with Adisa, growing from 2.5% in July 2019 to 3.2% in July 2020, PanAm growing to 6.7% from 6.2% and ASSA moving to 7.4% from 7.0%.

The following Sugese graphic compares premium income by insurer between July 2019 and July 2020 in millions of colones, where 1mn colones is roughly equal to US$1,660.

Source: Sugese