Ley Reguladora del Mercado de Seguros

Insurance Market Regulatory Law, including Comprehensive
Amendment to Law No. 12 of October 30, 1924
8653
THE LEGISLATIVE ASSEMBLY OF THE REPUBLIC OF COSTA RICA
DECREES:
INSURANCE MARKET REGULATORY LAW
TITLE I
INSURANCE AND REINSURANCE ACTIVITY
CHAPTER I
GENERAL PROVISIONS
ARTICLE 1. Object of this Law
This law is of public order and interest and has as its object to:
a) Protect the subjective rights and legitimate interests of insureds and interested third parties that are
generated from the offering, subscription, commercializing, or execution of insurance policies.
b) Create and establish the framework for authorization, regulation, supervision, and operation of
insurance, reinsurance, insurance brokerage, and ancillary service activities.
c) Create conditions for development of the insurance market and effective competition of the
participating entities.
d) Modernize and strengthen the National Insurance Institute (Instituto Nacional de Seguros, hereinafter
referred to as “INS”) so that it can compete effectively and efficiently in an open market without prejudice
to its social function within the framework of the social rule of law characterizing the Republic of Costa
Rica.
e) Ensure the funding and necessary conditions for adequate provision of services by the Distinguished
Corps of Firefighters of Costa Rica (Benemérito Cuerpo de Bomberos de Costa Rica).
f) Create the General Insurance Superintendency to oversee the insurance market’s stability and efficient
operation.
g) Expand and make the INS’s administrative procurement procedures and mechanisms more flexible.
ARTICLE 2. Insurance and Reinsurance Activity
The insurance and reinsurance activity in this country may only be engaged in by entities having the
respective administrative authorization issued by the General Insurance Superintendency, hereinafter
“Superintendence”, pursuant to the provisions of Article 7 hereof.
The insurance activity consists of accepting, in exchange for a premium, the transfer of insurable risks to
which third parties are exposed, in order to spread out over a group the economic burden their occurrence
may generate. The insuring entity that accepts this transfer is contractually obligated, in the occurrence
of the risk, to indemnify the policy beneficiary for economic losses that are sustained or to offset an agreed
amount of capital, income, or other benefits.
Reinsurance activity is understood as activity whereby, based on a reinsurance contract and in exchange
for a premium, a reinsurance entity accepts the assignment of all or part of the risk assumed by an
insurance entity by virtue of underlying insurance policies. Where appropriate, the provisions established
by legislation for insurance companies will be applicable to reinsurance companies.
All natural and legal persons who directly or indirectly engage in or carry out any type of insurance or
reinsurance activity or its brokerage or ancillary insurance services will be subject to the scope of this law’s
enforcement.
Excluded from the scope hereof are the obligatory social security systems administered by the Costa Rican
Social Security Institute (Caja Costarricense de Seguro Social, or CCSS), pursuant to the provisions of Article
73 of the Constitution, Article 2 of Law No. 17 of October 1943, creating the CCSS; the special pension
regimes created by law, and the mandatory mutual policy administered by the Life Insurance Company of
the National Teachers' Union (Sociedad de Seguros de Vida del Magisterio Nacional), pursuant to the
provisions of Articles 496 to 508 of the Code of Education (Código de Educación), Law No. 181 of August
18, 1944, and its amendments.
ARTICLE 3. Public Offering of Insurance and Insurance Business
Only those who are authorized to do so may make a public offering of insurance and insurance business,
as provided herein.
Public offering of insurance covers any activity that seeks to sell one or several insurance policies,
including the promotion and advertising of insurance of any kind and by any dissemination or
communication means, the providing of specific or concrete information concerning a particular insurance
policy, general presentations or convocations to those presentations on insurance companies and the
services or products they provide, and insurance brokerage.
The carrying out of insurance business is understood as any action that implies the exercise of insurance
activity, including actions that generate the obligations and rights of an insurance policy or the
preparatory acts for materializing such policy, said preparatory acts and any activity needed for
performing obligations or claiming rights arising from an insurance policy, including ancillary insurance
services, and any act implying the managing of an insurance policy or customer portfolio.
CHAPTER II
RIGHTS OF INSUREDS
ARTICLE 4. Rights of Insureds
All natural or legal persons who directly or indirectly participate in insurance activity will be subject to the
legislation on the promotion of competition and effective consumer protection.
Insurance consumers are guaranteed the right to protect their economic interests and the right to
equitable treatment and freedom of choice among insurance companies, insurance brokers, and ancillary
services of their preference with adequate quality standards, as well as the right to receive adequate and
truthful information, prior to the signing of any policy, on the companies that will provide effective
coverage for the different insurable or insured economic interests and risks.
Moreover, insureds must receive a timely response to all claims, petitions or requests they submit
personally or by means of their legal representative to an insurance entity, agent, or brokerage, within
thirty calendar days, as defined in regulations.
In all cases, when payment or indemnification is involved it must be made within the aforementioned
time period as of notice of the timely response. Notwithstanding, when provision of a service or a periodic
income is involved, it must be provided according to the provisions of the respective policy and this law,
or in the absence thereof, in a prudential time period agreed by the parties or set by the National
Consumer Commission.
All the rights stated herein for consumers will also be recognized for policy beneficiaries in those cases
where they are not the same person or persons as the consumer.
All of the foregoing is without prejudice to the consumer rights and guarantees enshrined in Law No. 7472,
Promotion of Competition and Effective Consumer Protection (Ley de Promoción de la Competencia y
Defensa Efectiva del Consumidor), of December 20, 1994, its amendments and other related provisions.
ARTICLE 5. Consumer Interests
The following provisions will also be observed regarding the protection of consumer interests:
a) The right to protection of their economic interests and to equitable and non-discriminatory treatment
is guaranteed.
b) Their right to freedom of choice among insurance companies, insurance brokers and ancillary services
of their preference with adequate quality standards is recognized.
c) Insurance companies must fully abide by relevant rules and regulations and the stipulations of insurance
policies. In case of doubt, the case must always be resolved in favor of the consumer. This principle must
be observed in administrative proceedings as well as arbitration and court proceedings.
d) Insurance policy claims, requests and petitions must be handled quickly and by means of a reasoned
written resolution delivered to the interested party in the manner agreed for such purpose.
e) Resolution of insurance policy disputes must observe, respectively, current special laws, the provisions
of the Code of Commerce (Código de Comercio), the Civil Code (Código Civil) and the rest of the body of
laws and relevant national jurisprudence, as well as the technical principles, uses and customs and
international jurisprudence compatible with our body of laws; special provisions will prevail over general
provisions.
ARTICLE 6. Right to Information and Confidentiality
All interested parties will have the right to obtain full, technical, and truthful information on insurance
matters.
In addition to the information obligations set forth herein, insurance companies or brokers must inform
consumers, prior to the signing of any policy, of the companies comprising their network of ancillary
service providers for the benefits being contracted. When requiring the services, consumers will freely
choose among the different providers comprising the network.
Confidential information provided by consumers to insurance companies, brokers, or ancillary service
providers regarding an insurance policy must be treated as such. Unauthorized use of the information,
leading to damages or losses for the consumer, must be indemnified by the responsible party, without
prejudice to any other legal action that may pertain.
CHAPTER III
INSURANCE ENTITIES
SECTION I
AUTHORIZATION AND REQUIREMENTS FOR OPERATION
ARTICLE 7. Administrative Authorization
Pursuant to the provisions of Article 2 hereof, the following entities may apply for administrative
authorization to exercise insurance activity in the categories of general insurance, personal insurance, or
both:
a) Private law entities incorporated in Costa Rica as corporations with the exclusive corporate purpose of
exercising insurance activity. Entities pertaining to financial groups will be subject to Article 141 and
subsequent articles of the Organic Law for the Central Bank (Ley Orgánica del Banco Central de Costa
Rica), Law No. 7558 of November 3, 1995. Public banks may only set up this type of company pursuant to
the provisions of Article 47 hereof.
b) Insurance entities incorporated under the laws of other countries may operate in Costa Rica through
branch offices, pursuant to Article 226 of the Code of Commerce (Código de Comercio). In these cases, the
exclusive corporate purpose will be to exercise insurance activity.
c) Insurance entities incorporated as insurance cooperatives with the exclusive purpose of engaging in
insurance activity with their members. Said entities will be subject to the provisions hereof.
The State will exercise insurance activity through the INS and the companies set up by and between public
banks and the INS. By virtue of the principle of the unity of the State, the Central Government as well as
the other Public Sector institutions recognize the INS as the only state insurance company. For this, the
State will directly contract from the INS all the necessary insurance to meet its needs, as long as the INS
offers more favorable conditions, considering the premium, deductible, coverage, and exclusions, and the
quality of financial and reinsurance backing.
The National Financial System Supervisory Council (Consejo Nacional de Supervisión del Sistema
Financiero), hereinafter the National Council, will set, by means of regulations, the rules for authorization
and operation of the entities, as well as the branches included in each category and the insurance lines
comprising them. Annuity plans for the mandatory supplementary pension regime, defined by the Worker
Protection Law (Ley de Protección al Trabajador), may only be marketed by entities specializing in personal
or mixed insurance. The National Council will define, by means of regulations, the operating and control
aspects for marketing of the aforementioned annuity plans.
To obtain and maintain administrative authorization, without prejudice to the other penalties and
responsibilities set forth herein and in the general body of law, insurance companies and reinsurance
companies must meet the obligations specified in Articles 36 and 38 hereof.
The entities will answer jointly and severally for damages and equity losses caused, in the exercise of their
activity, to insureds, beneficiaries, or third parties as a result of fraudulent or wrongful acts by the
members of their boards of directors, managers and employees and by the insurance agents comprising
their distribution networks.
ARTICLE 8. Regulation Applicable to Financial Groups
The provisions regarding financial groups included in the Organic Law for the Central Bank of Costa Rica
(Ley Orgánica del Banco Central de Costa Rica), Law No. 7558 of November 3, 1995 and its amendments
will also apply to insurance companies that are not organized as corporations, regardless of their nature,
whether public or private, when they own shares of stock in companies dedicated to the provision of
other financial services, pursuant to the laws that govern them.
In such cases, each of the aforementioned insurance companies that sets up or operates one or several
subsidiaries will be equated, for the purposes of effective consolidated oversight, to the controlling
company of a financial group, and the relationship with and among its subsidiaries will be governed in all
rationally applicable matters by the provisions of the Organic Law for the Central Bank of Costa Rica (Ley
Orgánica del Banco Central de Costa Rica), Law No. 7558 of November 3, 1995 and its amendments, as
described in the regulations to be dictated by the National Council.
ARTICLE 9. Board of Directors and Management Positions
Insurance companies incorporated as corporations will have boards of directors consisting of at least five
members of good repute and proven technical suitability. At least forty percent (40%) of the board
members may not be shareholders or relatives to the third degree of consanguinity or kinship of
shareholders of the company, nor may they be employees of the same economic or financial group.
The following may not be members of the board of directors:
a) Persons who have been convicted in the last five years of an intentional offence against property, good
faith in business, or public faith as defined in Titles VII, VIII and XVI of Book II of the Criminal Code (Código
Penal), respectively.
b) Persons who are serving a sentence for committing the offences mentioned in the preceding section.
The same prohibitions will be applied to branch office representatives and management positions of the
insurance companies that are specified, together with other applicable requirements, by the respective
regulations.
SECTION II
SOLVENCY AND CAPITAL ADEQUACY REGIME
ARTICLE 10. General Provisions of the Solvency and Capital Adequacy Regime
The National Council will define, by means of regulations, the rules and requirements of the solvency and
capital adequacy regime that insurance companies and reinsurance companies must adhere to at all
times. To do so, it will observe reasonable and prudent assumptions and internationally accepted
practices that best adapt to the Costa Rican insurance market. The regulations will also determine the
capital requirement and technical provisions and reserves, as well as the investment regime for the
backing assets, asset and liability valuation rules for insurance companies and reinsurance companies, and
the early warning levels that entail corrective measures by the supervised entities and intervention by the
Superintendence.
An entity will be deemed to have complied with the solvency and capital adequacy regime when its capital
requirement, technical provisions and reserves are fully backed (100%) by admissible assets, duly valued
according to technical criteria for this purpose.
The supervised entities’ internal and external auditors will be obligated to immediately inform the
Superintendency of detected situations that may be seen as illegal transactions or that may pose a risk to
the entities’ financial stability.
ARTICLE 11. Minimum Capital
The required minimum capital will be valued in development units in accordance with Law No. 8507 of
April 28, 2006. The minimum capital requirements are as follows:
a) Personal insurance insurers: three million development units (UD 3,000,000)
b) General insurance insurers: three million development units (UD 3,000,000)
c) Mixed personal and general insurance insurers: seven million development units (UD 7,000,000)
d) Reinsurers: ten million development units (UD 10,000,000)
No insurance company or reinsurance company may start operations until they have fully subscribed and
paid their minimum capital in cash. Said capital must be initially deposited in the Central Bank of Costa
Rica (Banco Central de Costa Rica) and may be withdrawn according to the investments made.
ARTICLE 12. Capital Requirement
The capital requirement will be understood as the minimum equity that insurance companies must
maintain, free of all foreseeable commitment. This must be sufficient to cover at least the estimated
technical, credit, market, and operational risks faced by the insurance companies.
To determine this, the regulations will consider valuation of assets and liabilities at their economic value
and assignment of risks by the entities by means of admissible systems.
SECTION III
TECHNICAL PROVISIONS, RESERVES, AND INVESTMENT
ARTICLE 13. Technical Provisions and Reserves
Insurance companies and reinsurance companies must set up and maintain, at all times, sufficient
technical provisions to ensure performance of their insurance and reinsurance contract obligations, as
applicable. Likewise, they will set up and maintain sufficient reserves to handle other risks that may affect
their business development.
In addition to what the National Council may define, the entities may only set up provisions and specific
reserves when the Superintendency has so authorized.
ARTICLE 14. Investment Provisions
Insurance companies and reinsurance companies are obligated to maintain investments in eligible assets,
as defined by regulations, backing the technical provisions, reserves, and capital requirement, which may
not be less than the minimum capital. Such investments will be the entities' property and must be kept
free of encumbrances, seizures, precautionary measures, or measures of any other nature that could
block or hinder their free assignment or transfer.
The National Council will establish, by means of regulations, the systems and criteria for valuating and
admitting assets, margins, diversification limits, and other conditions for management of the assets
backing the investment. The regulations may exclude securities based on the credit risk rating of their
issuers or any objective measure of market or liquidity risk. Assets failing to meet the provisions of
investment regulations and this law, as well as assets issued by companies related to the same financial
or economic groups as those of the insurance companies, will not be taken into account for the purpose
of evaluating the entities’ solvency and capital adequacy.
Information on the investments referred to herein will be deemed public information. The
Superintendency will periodically publish information on the composition of each entity’s investment
portfolio with the credit risk rating of the security issuers comprising such portfolio, and will make it
available to the public.
ARTICLE 15. Guiding Investment Principles
Investments will be governed by the following principles:
a) Insurance companies and reinsurance companies must manage their investments in a sound and
prudent manner, identifying, measuring, controlling, and managing their risks. To do so, they will define
their investment policy and procedures for their choice and mix of financial assets, diversification, and risk
management.
b) The securities may be public offerings, individual securities issued by financial institutions supervised
by the General Financial Entity Superintendency (SUGEF) and the Central Bank of Costa Rica, commercial
securities and private offerings, as well as counterpart instruments in another jurisdiction, all in
accordance with the respective regulations.
c) Entities may participate directly in the purchase of securities issued by the Central Bank and the Finance
Ministry under the placement mechanisms defined by these institutions.
d) The regulations may exclude any securities based on their market or liquidity risk ratings.
e) The securities must be traded in accordance with sound, acceptable market practices.
f) Securities subject to being held in custody must be held in custody by an authorized custodian.
g) Investments will be considered in terms of their economic value.
SECTION IV
CROSS-BORDER INSURANCE AND REPRESENTATIVE OFFICES
ARTICLE 16. Cross-border Insurance
Any natural or legal person may enter into contracts under the modality of cross-border trade with
insurance companies or providers of brokerage services or ancillary services of a country with which Costa
Rica has taken on such commitments through the signing of a current international treaty. Only those
services and conditions provided in the respective international treaty may be contracted under this
modality.
Without prejudice to other means of precautionary regulation of cross-border trade in services that may
be defined by the Council by means of regulations, the Superintendency will require registration of the
insurance companies and other cross-border providers. This same regulation will determine the cases in
which engaging in the insurance business and supplying insurance to the public is admissible in Costa Rica.
Reinsurance, retrocession, its intermediation, and ancillary services may be contracted under the modality
of cross-border services.
ARTICLE 17. Representative Offices
The Superintendency will keep a registry of the representative offices set up in Costa Rican national
territory. The National Council will regulate registration requirements and the delisting situations that
may occur. Only those offices listed in the registry may keep a locale open to the public, and they must
use the following reserved phrase in their company name: “Insurance Company Representative Office”.
Registration of a representative office in the registry does not authorize it to supply insurance or insurance
business to the public in the national territory.
SECTION V
ANCILLARY INSURANCE SERVICES
ARTICLE 18. Ancillary Insurance Services
Ancillary services will be understood as services that, without being insurance, reinsurance, retrocession
and intermediation activities, are indispensable for developing such activities. These services include,
among others, actuarial services, inspection, assessment, and consulting on risk management, claims
processing, accident indemnification, repair of damages including medical services, repair shop services,
and others provided directly as benefits for policy beneficiaries, appraisals, aid services that do not qualify
as insurance or reinsurance activity, accident inspection and assessment, and loss adjustment.
The National Council will regulate the provision of these services and require registration of ancillary
service providers based on the risk their specific activity poses for consumers. Said regulations may not
set discriminatory or unjustifiable requirements.
For the purposes of Article 3 hereof, ancillary insurance services may be provided as long as they are
exclusively related to insurance authorized pursuant hereto, or are related to commitments established
in current international treaties and comply with the regulatory provisions issued for this purpose by the
National Council.
CHAPTER IV
INSURANCE INTERMEDIATION
SECTION I
GENERAL PROVISIONS
ARTICLE 19. Insurance Intermediation
Insurance intermediation activity includes the promotion and supply and, in general, acts aimed at taking
out, renewing, or modifying insurance policies, executing claims procedures, and advising on those
policies. Insurance intermediation does not include the activities themselves of insurance or reinsurance.
The National Council will develop, by means of regulations, the aspects related to intermediation activity
established herein in this chapter, including the standardization of intermediary training programs,
licensing of agents and brokers, accreditation processing of agents and insurance agencies, administrative
authorizing of brokerage firms, and the guarantees these firms must provide.
Only duly authorized insurance intermediaries pursuant hereto may carry out insurance intermediation.
Insurance intermediaries may be insurance agents, insurance agencies, and insurance brokerage firms
and their brokers. Insurance agencies and brokerage firms may only engage in intermediation activity
through insurance agents and brokers, respectively. Cross-border trade in insurance intermediation
services and ancillary insurance services will be as provided by Article 16 hereof.
The Superintendency shall ask, administratively or judicially, anyone violating the provision in the
preceding paragraph to cease from using the improperly used expression. Competent judicial,
administrative, or municipal authorities may close down the business, pursuant hereto or to the licensing
law, if the violation has not ceased by ten calendar days after the respective notice has been served. The
business will remain closed until the violation is corrected.
The terms “insurance agent” or “insurance agency” and “insurance broker” or “insurance brokerage firm”
and their equivalent terms in any language, are reserved for the sole use of persons and entities having
the respective license and accreditation for marketing insurance, pursuant hereto.
ARTICLE 20. Intermediary License
Insurance agents and brokers must have the respective license granted by the Superintendence. The
license will authorize persons to act as intermediaries in the respective insurance branch or branches;
issuing of the license does not imply any liability whatsoever to third parties on the part of the
Superintendency with regard to this act.
To obtain the license, natural persons must meet the requirements set forth herein and in the regulations
and be free of any of the following incompatibilities:
a) Have been penalized with cancellation of the license within the last five years.
b) Be acting as director, manager, or employee of insurance, reinsurance, or financial institutions when
these are part of the same group or financial conglomerate as the intermediary company.
c) Engage in activities directly or indirectly associated with the insurance which could give rise to conflicts
of interest, as defined by the regulations.
d) Have been convicted in the last five years of committing an intentional offence against property, good
faith in business, or public faith, as defined in Titles VII, VIII and XVI of Book II of the Criminal Code (Código
Penal), respectively.
e) Be serving a sentence for having committed the offences mentioned in the preceding section.
The incompatibilities specified in sections (b) and (c) of the preceding paragraph will remain in effect for
a one-year period as of the date on which the incompatibility ceases to affect the person.
ARTICLE 21. Intermediary Accreditation
In addition to the license mentioned in the preceding article, in order to carry out intermediation activities
insurance agents will have to be accredited by an insurance company and brokers will have to be
accredited by a brokerage firm. Moreover, insurance agencies will require such accreditation by an
insurance company in order to start operations.
Insurance companies will be responsible to the Superintendency for the selection, training, continuous
education and accreditation of insurance agents in their distribution channel. Brokerage firms will likewise
be responsible with respect to brokers.
ARTICLE 22. Insurance Intermediaries
I) Insurance Agents and Insurance Agencies
Insurance agents are natural persons who engage in insurance intermediation and are accredited by one
or several insurance companies and linked to them by means of a contract that enables them to act on
their behalf and account, or solely on their account. In the first case, third parties taking out policies
through the agent acquires rights and contracts obligations with the insurance company. In the second
case, the insurance agent’s actions must be validated by the insurance company in order for the company
to be contractually obligated.
Insurance agencies are legal persons registered in the Commercial Registry as corporations with the sole
corporate purpose of insurance intermediation under the title of insurance agency and operating under
the same conditions specified in the preceding paragraph for agents.
II) Insurance Brokerage Firms and their Brokers
Insurance brokerage firms are legal persons registered in the Commercial Registry as corporations with
the sole corporate purpose of insurance intermediation under the title of insurance brokerage firm. They
will carry out said intermediation without acting on the behalf and account of one or several insurance
companies, and will exercise it solely through brokers who have the respective license and accreditation.
Insurance brokers are the natural person intermediaries who have licenses from the Superintendency for
such purposes and who must be accredited by a brokerage firm in order to engage in intermediation
activity.
Brokerage firms must have the administrative authorization of the Superintendency in order to start
operations.
Brokerage firms will be directly answerable for damages and equity losses caused by negligence or
maliciousness in the exercise of their intermediation activities or those of the brokers they have
accredited.
To obtain and maintain the license or administrative authorization, as appropriate, and without prejudice
to the other penalties and liabilities established herein and in the general body of law, intermediaries
must perform the obligations specified in Articles 36 and 38 hereof.
ARTICLE 23. Financial Entity Authorization
Financial conglomerates or groups regulated by the National Council may set up or maintain companies
dedicated to insurance intermediation, as long as they comply with the provisions herein.
Public banks may participate in insurance activity as intermediaries by setting up corporations that must
have the sole aim of engaging in the activities specified in this chapter; they may set them up as sole
shareholders.
SUGEF-supervised entities may not require their customers to take out insurance policies with specific
insurance companies or insurance intermediaries. For all effects and purposes, the foregoing will be
considered relative monopolistic practices under the terms of Law No. 7472, Promotion of Competition
and Effective Consumer Protection (Ley de Promoción de la Competencia y Defensa Efectiva del
Consumidor), of December 20, 1995, and its amendments.
SECTION II
SELF-ISSUE INSURANCE INTERMEDIATION
ARTICLE 24. Self-Issue Insurance
Insurance companies may enter into commercial agreements with persons other than the intermediaries
regulated herein for the distribution of self-issue insurance. Self-issue insurance is considered insurance
that meets the following characteristics simultaneously:
a) It protects insurable interests and risks common to everyone or most natural persons.
b) Its general, particular, and special conditions are written out clearly and precisely, using simple
language, giving special emphasis to definitions, limiting clauses of policyholder’s rights, and policy
exclusions, and following the guidelines the Superintendency may issue for such purpose.
c) It is subject to standardization and mass marketing as it does not require specific conditions with regard
to the insurable interests or persons.
d) Its issue does not require a prior analysis and risk selection process.
e) (This section is revoked by Article 113, section (d) of Law No. 8956 of June 17, 2011, Insurance Policy
Regulatory Law (Ley Reguladora del Contrato de Seguro).)
The National Council will regulate the requirements and other conditions that must be met for marketing
of this type of insurance.
CHAPTER V
GENERAL OBLIGATIONS OF
INSURANCE MARKET PARTICIPANTS
ARTICLE 25. Obligations of Insurance and Reinsurance Companies
Without prejudice to the other obligations provided herein, insurance and reinsurance companies must:
a) Collaborate with and facilitate the Superintendence´s oversight.
b) Carry out authorized activities for the authorized corporate purpose and obtain prior authorization to
assign or transfer, in any way, their insurance portfolios, or merge or transform themselves.
c) Report relevant events and submit accurate and complete information to the Superintendency with the
required formalities and by the required deadlines.
d) Comply with the preventive or corrective actions and other orders issued by the Superintendence.
e) Obtain and maintain, by at least eighteen months after starting operations, a risk rating issued by a
rating agency recognized by the General Superintendency of Securities (SUGEVAL). In the case of
reinsurance companies, the risk rating must be given by an international rating agency.
f) Observe the technical standards issued by the National Council of Supervision or the Superintendency
for the setting up of technical provisions and reserves, estimation of risks, and custody and valuation of
assets and liabilities.
g) Write insurance policies in compliance with the law, regulations, and provisions issued by the
Superintendency or the National Council.
h) Determine and periodically review the content of its policies and the technical and actuarial rationales
used in them.
i) Keep adequate accounting or legally required records.
j) Make available at any time to the Superintendency the technical bases used for rate setting and the
technical notes for the products.
k) Register the policy types and product technical notes at the Superintendence. Authorized insurance
companies will only be able to market and advertise their products, under their responsibility, after
submitting the applications for registration. They must also comply with adjustments requested by the
Superintendency in accordance with the provision of Article 29, section (d), hereof. An exception to this
registration is made for non-membership policies whose complexity keeps them from being standardized,
according to the criteria and annual premium amount defined by the National Council of Supervision by
means of regulations.
(The preceding section was thus amended by Article 110 of Law No. 8956 of June 17, 2011, “Insurance
Policy Regulatory Law” (Ley Reguladora del Contrato de Seguros).)
l) Maintain the required solvency and capital adequacy regime.
m) Define control policies and procedures and establish accounting, financial, information, internal
control, and communication systems.
n) Have job positions, administrative authorities, internal as well as external control bodies, and
policyholder service in the terms and conditions provided by the National Council.
ñ) Provide policyholders with the information they expressly request concerning the policies in which they
have a legitimate direct interest, as long as this does not correspond to the companies' own information.
o) Advertise with truthful information, in such a way that it is neither ambiguous nor misleading for
consumers, and deliver the information referred to in Articles 4 and 6 hereof.
p) Pursuant to the provisions of Article 40 of Law No. 8228 of March 19, 2002, draft four percent (4%) of
all direct premiums of all insurance sold in the country to the Fund for the Distinguished Corps of
Firefighters of Costa Rica (Benemérito Cuerpo de Bomberos de Costa Rica) every month.
q) Refrain from using intermediaries for acts aimed at obtaining a result which, if directly obtained, would
imply committing a serious or very serious violation.
r) Report their relevant events in the manner and by the means defined by the Superintendence.
s) Define auditable conflict of interest policies and report their business dealings with related companies,
shareholders, members of the board of directors and other management positions to the Office of the
Superintendent, by the means said Office has decided.
t) Remit and publish full and accurate information as required for the public.
u) Update accounting books or mandatory records.
v) Implement the necessary measures to keep their employees from using restricted information to obtain
undue advantages for themselves or third parties.
w) Observe the deadlines set for refunding the cash value equivalent to the unearned part of the premium
and the accrued profit share and securities guaranteed in favor of the policyholder, when relevant.
x) Deliver the policy or respective document, according to the insurance modality involved, to the
policyholder within the established time periods.
y) Preserve the insurance policies, duly signed by the parties when relevant, and the documents that must
be kept in custody pursuant to the law, regulations, and current provisions.
z) Comply with the legal specifications or technical regulations established for mandatory insurance, when
relevant.
The National Council of Supervision may issue the necessary regulations, as relevant, for determining the
content, periodicity, conditions, formats, terms, and functionality of the obligations indicated in this
article and, in general, any aspect needed for their effective compliance, oversight, verification, and
punishment in the event of non-observance.
ARTICLE 26. Intermediary Obligations
Insurance intermediaries will have the following common obligations, without prejudice to other
obligations stipulated herein:
a) Observe the regulations and provisions of the National Council and the Superintendence.
b) Supply to the public or engage in insurance business solely in relation to authorized insurance or
insurance and reinsurance companies.
c) Refrain from disclosing or using, for their own benefit or that of third parties, information possessed by
the insurance company that they have obtained by virtue of the intermediary activity.
d) Preserve free of any alteration the formulas and other documents complementing insurance
applications, as well as the information recorded therein, unless authorized to this respect, and record
solely exact and accurate information on the risk conditions.
e) Provide their intermediation services without receiving any unauthorized pay whatsoever from
policyholders.
f) When requested to do so by insurance companies, immediately provide the documents or information
concerning the insurance companies’ business dealings.
g) Immediately disclose relevant events and submit accurate and complete information to the
Superintendency with the required formalities and by the required deadlines.
h) Advertise with truthful and accurate information and deliver the information referred to in Article 4
hereof.
i) In the case of legal persons, carry out insurance intermediation solely through natural persons with the
respective license and accreditation.
j) Inform customers, in the case of insurance agents and agencies, if they are acting on behalf and for the
account of the insurance company or solely for the account of the latter.
k) In the case of insurance agents and agencies, represent solely one insurer with regard to intermediation
of competing insurance lines.
l) In the case of insurance agents and agencies, abstain from encouraging a change of insurance company
in all or part of the portfolio of insurance policies taken out with their intermediation. Likewise, abstain
from making dispositions, without the consent of the insurance company they represent, on their
intermediary position in said portfolio, insofar as the portfolio is considered the property of the insurance
company.
m) In the case of insurance brokerage firms and their brokers, advise impartially persons who wish to take
out insurance with their intermediation, offering the most appropriate coverage for their needs and
interests.
n) In the case of insurance brokerage firms, maintain the guarantees or civil liability coverage required by
the regulations to answer to their actions as insurance intermediaries and to the actions of their
accredited brokers.
ñ) Refrain from using intermediaries for acts aimed at obtaining a result which, if directly obtained, would
imply committing a serious or very serious violation.
o) Keep updated samples of the policies supplied by insurance companies available to the public.
p) Keep at least one front office open to the public.
q) Provide assistance and advisory to policyholders or potential policyholders, giving them truthful and
timely information regarding policies, especially on the conditions of the insured risks, the amount
covered, the duration of the policy, the laws, and the procedures to apply in case of accident. Stay in line
with the rates and conditions defined by the insurance company, not offering their customers different
ones or charging policyholders any kind of unauthorized pay for their intermediation services.
r) Deliver policies or the documents required by regulations to policyholders within the established time
periods.
s) Transfer the money and valuables collected on behalf of the insurance company within the time periods
and in the conditions set forth in the respective agreements in order not to cause harm to the
policyholders.
In all cases they have an obligation not to disclose or use, unjustifiably and without the authorization of
the insurance companies or policyholders, information concerning these that has been obtained by virtue
of the intermediation activity.
The National Council and the Superintendence, as relevant, may issue the necessary regulations for
determining the content, periodicity, conditions, formats, terms, and functionality of the obligations
indicated in this article and, in general, any aspect needed for their effective compliance, oversight,
verification, and punishment in the event of non-observance.
ARTICLE 27. Ancillary Service Provider Obligations
Ancillary service providers will have the following obligations:
a) Refrain from providing ancillary services to insurance or reinsurance companies not authorized to offer
to the public or engage in the business of insurance or authorized products in Costa Rica.
b) Prepare actuarial studies and issue reports and recommendations concerning such studies, based on
the regulatory and technical rules governing the actuarial technique.
c) Conduct external audits free of defects or substantial irregularities or in accordance with current
regulations.
d) Report relevant events and submit accurate and complete information to the Superintendencywith the
required formalities and by the required deadlines.
e) Render the respective guarantees or be listed in the registry as required by regulations.
f) Refrain from using intermediaries for acts aimed at obtaining a result which, if directly obtained, would
imply committing a serious or very serious violation.
g) Remit and publish full and accurate information as required for the public.
h) Provide assistance and advisory to insurers or policyholders, giving them truthful and timely
information.
In all cases they have an obligation not to disclose or use, unjustifiably and without the authorization of
the insurance companies or policyholders, information concerning these that has been obtained by virtue
of the intermediation activity.
The National Council and the Superintendence, as relevant, may issue the necessary regulations for
determining the content, periodicity, conditions, formats, terms, and functionality of the obligations
indicated in this article and, in general, any aspect needed for their effective compliance, oversight,
verification, and punishment in the event of non-observance.
TITLE II
CREATION OF THE GENERAL INSURANCE SUPERINTENDENCY
CHAPTER I
CREATION, PURPOSE, AND FUNCTIONS OF THE OFFICE OF THE GENERAL SUPERINTEDENCE OF
INSURANCE
SECTION I
GENERAL PROVISIONS
ARTICLE 28. Creation of the General Insurance Superintendency
Let the General Insurance Superintendency be created as a fully decentralized body under the Central
Bank of Costa Rica with instrumental legal personality and capacity. The office shall have an insurance
superintendent and an insurance intendant.
The Superintendency will operate under the direction of the National Financial System Supervisory
Council (Consejo Nacional de Supervisión del Sistema Financiero) and will be integrated into the financial
oversight system established in Articles 169 to 177 of the Stock Market Regulatory Law (Ley Reguladora
del Mercado de Valores, Law No. 7732 of December 17, 1997, with the exception of Articles 174 and 175
of said law. The provisions established generically and uniformly for other Superintendencies under the
National Council and their respective superintendents and intendants will apply to this Superintendence,
the superintendent, and the intendant.
The Central Bank of Costa Rica will bear the expenses needed to ensure proper and efficient operation of
the Superintendence.
The Superintendency will govern its activities as provided in this law, its regulations, and other relevant
laws. The general rules and directives dictated by the Superintendency will be of mandatory observance
for the supervised entities and persons.
The Superintendency is an operationally independent and responsible body in the exercise of its duties; it
has sufficient authority, legal protection, and financial resources for performing its duties and exercising
its powers. Moreover, it must adopt clear, transparent, and coherent regulations and oversight and must
employ, train, and maintain a sufficient work team with high professional standards, who must adhere to
appropriate standards of confidentiality.
ARTICLE 29. Purpose and Functions of the General Insurance Superintendency
The purpose of the Superintendency is to oversee the stability and efficient operation of the insurance
market and deliver the fullest possible information to policyholders. To do so, it will authorize, regulate
and supervise natural or legal persons intervening in the acts or contracts related to the insurance or
reinsurance activity and the public offering and engagement in the business of insurance.
In addition to the duties set forth herein, the superintendent will be subject to the provisions of Article
156 with regard to engaging in the insurance activity, intermediation, public offering, or insurance
business without authorization, and Articles 129 and 131, with the exception of sections (m), (n), and (ñ),
of the Organic Law for the Central Bank of Costa Rica (Ley Orgánica del Banco Central de Costa Rica), Law
No. 7558 of November 3, 1995 and its amendments. The regulations set forth in Articles 151, 152, 166,
and 180 of the Stock Market Regulatory Law (Ley Reguladora del Mercado de Valores), Law No. 7732 of
December 17, 1997, and its amendments, will also apply to the superintendent. An exception to the
foregoing is the disclosure of aggregate statistical information and the information provided herein.
Likewise, the provisions set forth in Article 57 of Law No. 7523, Private Supplementary Pension Regime
and Amendments to the Stock Market Regulatory Law and the Code of Commerce (Régimen Privado De
Pensiones Complementarias y Reformas De La Ley Reguladora Del Mercado De Valores Y Del Código De
Comercio), of July 7, 1995, will also apply to the superintendent.
Additionally, the Superintendency will have the following functions:
a) Authorize, suspend, cancel, and grant licenses and administrative authorizations to supervised subjects,
pursuant hereto.
b) Authorize insurance companies’ corporate bylaws and their amendments, and the use in trade names
of the terms “insurance”, “insurer”, “reinsurer”, “underwriting”, “insurance agency”, and “insurance
brokerage firm” or similar terms in applications for registration at the Public Registry; the Public Registry
will not process any registration of this type without the indicated authorization.
c) Authorize the merger, absorption, full or partial portfolio transfer and all other changes affecting the
nature of the supervised entities, making sure at all times that the agreed contractual conditions of the
policyholders are respected, except where the policyholders expressly agree to modification of the same.
This authorization must be issued prior to the indicated process and will require a hearing before the
Commission for the Promotion of Competition (Comisión para Promover la Competencia) during fifteen
calendar days from delivery of the information. The Commission’s decision must specify the effects on
competition and any recommendations it deems necessary. The Commission for the Promotion of
Competition’s decision is non-binding for the Superintendence. Notwithstanding, should the
Superintendency decide not to abide by the decision it must give the reasons for its resolution.
d) While registration of the policy types and product technical notes referred to in Article 25, section (k)
hereof is in effect, the General Superintendent of Insurance may issue reasoned resolutions making
observations to or requiring modifications from the insurance companies with regard to the registered
products, and especially, policy conditions, whenever it detects that the writing is not clear or the
insurance conditions may be abusive or in violation of the law. Said modifications will be the insurance
companies’ responsibility and will operate for new policies or renewals of earlier ones.
(The preceding section was thus amended by Article 111 of Law No. 8956 of June 17, 2011, “Insurance
Policy Regulatory Law”.)
e) In the case of mandatory insurance, the Office of the Superintendent will authorize premium rates
pursuant to Title IV of the Labor Code (Código de Trabajo) and Chapter II of Title I of the Law for Traffic on
Public and Overland Roads (Ley de Tránsito por Vías Públicas y Terrestres).
f) The Superintendency must keep a record of intermediaries, accreditations, and representative offices
set up in the national territory and will publish a list of those who have been suspended from exercising
insurance intermediation.
g) Require insurance companies to revise premiums that are insufficient for covering the obligations and
expenses entailed by policies or that are inadequate or arbitrarily discriminatory according to
reasonableness and risk assessment criteria, among other criteria.
h) Should it confirm an infringement or job incompatibility on the part of the members of the INS Board
of Directors, it must report this to the Governing Council for action to be taken.
i) Propose the regulations needed for enforcing this law and complying with its authorities and duties to
the National Council for approval. The issuing of new regulations must provide a prudential time period
for the supervised entities to adjust to the new regulations.
j) Dictate other technical or operational rules, regulations, and directives.
k) Determine, when there is any doubt, at its own initiative or at the request of one of the parties and by
means of a general reasoned resolution, if an activity is deemed insurance activity for the purposes hereof
and under the parameters established in Article 2 hereof.
l) Impose the precautionary measures and administrative penalties provided herein.
m) Make relevant information available to the public on the insurance activity and insurance companies’
activities.
n) Propose regulations to the National Council for the creation, operating definition, and operation of an
authority to protect the interests of policyholders or insurance beneficiaries with regard to the resolution
of disagreements with insurance companies on the execution of insurance policies.
ñ) Maintain updated the public records established herein or those defined through regulations by the
National Council.
o) Report anticompetitive practices detected in the evolution of the insurance market to the Commission
for the Promotion of Competition.
p) Immediately transfer to the National Consumer Commission any irregular events or situations it detects
or learns of in relation to the scope of application of Law No. 7472, Promotion of Competition and Effective
Consumer Protection, of December 20, 1995, and its amendments.
q) Oversee compliance with the provisions of Article 40 of the Law for the Corps of Firefighters of the
National Insurance Institute (Ley del Cuerpo de Bomberos del Instituto Nacional de Seguros), Law No. 8228
of March 19, 2002.
SECTION II
EVALUATION OF SUPERVISED ENTITIES AND ADMINISTRATIVE INTERVENTION
ARTICLE 30. Risk Assessment and Intervention
The National Council will define the assessment model for risk areas and control of the solvency regime
of insurance and reinsurance companies, as well as the parameters for early warning and intervention by
the Office of the Superintendent. Without prejudice to the foregoing, Article 156 of the Stock Market
Regulatory Law, Law No. 7732 of December 17, 1997, shall apply.
Entities offering insurance or reinsurance to the public under the supervision of the Superintendency may
not resort to administrative proceedings and court-ordered reorganization or to compositions with
creditors.
The supervised entities’ internal and external auditors must immediately inform the Superintendency of
detected situations that may be seen as illegal transactions or that may pose a risk to the entities’ financial
stability.
ARTICLE 31. Inspection Visits
The Superintendencymay make inspection visits to check the business dealings and affairs of the
supervised entities, including inspection of books, records, accounting, and other documents, within the
limit of its competencies.
CHAPTER II
AUTHORIZATION CANCELLATION, LIQUIDATION AND BANKRUPTCY
ARTICLE 32. Authorization Cancellation and Liquidation
The Superintendency may cancel insurance and reinsurance companies' operating authorization
whenever the entities’ situation is so serious that intervention is not a viable mechanism for helping them
to recover, at the legal representative’s request for voluntary liquidation and in the other cases provided
herein.
Resolutions cancelling authorization will be subject to motions for revocation of judgement with
supplementary appeals. Remedies must be lodged within five business days. Appeals will be resolved by
the National Council.
Once final resolutions are issued in which authorization for operation is definitively cancelled, the
companies will be dissolved and go into liquidation pursuant hereto and to the Code of Commerce (Código
de Comercio).
ARTICLE 33. Priority of Claims
After paying liquidation costs, liquidators will then pay creditors, pursuant to Article 33 of the Labor Code
(Código de Trabajo), who will have priority over any other debt. Payment will then be made on obligations
arising from insurance policies; first paid will be annuity policies deriving from the Workers Protection Law
(Ley de Protección al Trabajador), Law No. 7983, after which privileged creditors will be paid, pursuant to
Article 901 of the Code of Commerce (Código de Comercio).
If there are any remaining assets, they will be distributed among common creditors in proportion to the
amount of their respective claims. Prior to paying common creditors, liquidators must create a reserve for
handling expenses, attorneys’ fees, and the guarantees that must be rendered for lawsuits to which the
companies are parties.
Any assets or rights remaining in favor of the company after obligations have been paid off will be
distributed among shareholders in proportion to their number of shares.
ARTICLE 34. Bankruptcy Application
Should any of an insurance or reinsurance company's creditors request a declaration of bankruptcy, the
court will immediately notify the superintendent to determine the company’s solvency. The
superintendent must render a decision within twenty business days from the date on which the request
was made by the court. No summary proceedings for recovery may be initiated against the company
during this time period and the bankruptcy process will be suspended.
If the superintendent confirms that the company is solvent, he or she will inform the court of the measures
that should be imposed on it and the deadlines for their implementation. Otherwise, if the superintendent
deems the company is not solvent or the company does not comply with the imposed measures by the
established deadlines, the company will be declared bankrupt. The court will not admit applications for
bankruptcy when they are made by the insurance companies. Nor will it process applications if when they
are submitted the companies are in the process of intervention.
After an insurance company has been declared bankrupt, it will be responsible for its liquidation,
preserving the interests of policyholders and creditors.
Where no provision is made in this chapter, the regulations concerning bankruptcy and arrangement with
creditors laid down in the Code of Commerce (Código de Comercio) and the Code of Civil Procedure
(Código Procesal Civil) shall apply by way of supplement.
CHAPTER III
OFFENCES AND POWERS OF SANCTION
ARTICLE 35. Powers of Sanction
The precautionary measures and administrative penalties for the offences provided herein will be
imposed by the superintendent. Motions for revocation and appeals against such acts will be admitted
within three business days.
Administrative penalties that are imposed will be without prejudice to any pertinent civil or criminal
liabilities.
For the exercise of powers of sanction, the National Council will establish by means of regulation a special
procedure which must follow the principles of said process. The criteria for graduation of penalties laid
down in Article 164 and the points concerning powers of sanction in Article 168, both of the Stock Market
Regulatory Law (Ley Reguladora del Mercado de Valores), Law No. 7732 of December 17, 1997, will apply.
In the event of noncompliance with the time periods and formalities established for remittance of
information in the securities custody regime or the solvency regime, the superintendent may impose the
penalties established herein upon mere confirmation of the noncompliance; interested parties may file
motions for revocation and appeals within three business days.
In regulations regarding penalties, base salary shall be construed as defined in Article 2 of Law No. 7337
of May 5, 1993 and its amendments, which creates the concept of base salary for special offences in the
Criminal Code (Código Penal).
When, in the judgment of the Superintendence, substantiated indications exist that activities regulated
hereby are being engaged in without due authorization, said Office will have the same powers, with regard
to the alleged offenders, of inspection, imposition of precautionary measures and penalties assigned to it
by this law for supervised entities.
The Superintendency must ensure that natural or legal persons engaging in Costa Rican territory in acts
or contracts related to the activities under its supervision have due administrative authorization. When
so ordered by the criminal magistrate judge, the business will be closed down with the help of the police
force.
ARTICLE 36. Very Serious Offences
1) An insurance or reinsurance company that fails to comply with any of the obligations set forth in
sections (a) through (s), inclusive, of Article 25 hereof shall be deemed to have committed a very serious
offence.
2) An intermediary that fails to comply with any of the obligations set forth in sections (a) through (ñ),
inclusive, of Article 26 hereof shall be deemed to have committed a very serious offence.
3) An ancillary service provider that fails to comply with any of the obligations set forth in sections (a)
through (g), inclusive, of Article 27 hereof shall be deemed to have committed a very serious offence.
ARTICLE 37. Penalties for Very Serious Offences
One of the following penalties will be imposed on insurance companies, reinsurers, insurance
intermediaries, and ancillary insurance service providers or other participants for each commission of a
very serious offence:
I) The following shall apply to insurance companies and reinsurance companies:
a) A fine of up to five percent (5%) of the company’s equity at the time the offence was committed.
b) Cancellation of the administrative authorization, license, or registration for two to five years.
II) The following shall apply to insurance intermediaries and ancillary service providers or other
participants:
a) A fine of up to four hundred times the base salary.
b) Cancellation of the license or registration for two to five years.
The penalty will be defined according to the criteria for graduation of penalty set forth herein and will be
made public. The Superintendency will define the means and formats of said publication, which must be
carried out immediately as soon as the penalty is definitive.
ARTICLE 38. Serious Offences
1) An insurance or reinsurance company that fails to comply with any of the obligations set forth in
sections (t) through (z), inclusive, of Article 25 hereof shall be deemed to have committed a serious
offence.
2) An intermediary that fails to comply with any of the obligations set forth in sections (o) through (t),
inclusive, of Article 26 hereof shall be deemed to have committed a serious offence.
3) An ancillary service provider that fails to comply with any of the obligations set forth in section (h) of
Article 27 hereof shall be deemed to have committed a serious offence.
ARTICLE 39. Penalties for Serious Offences
One of the following penalties will be imposed on insurance companies, reinsurers, insurance
intermediaries, and ancillary insurance service providers or other participants for each commission of a
serious offence:
I) The following shall apply to insurance companies and reinsurance companies:
a) A fine of up to two percent (2%) of the company’s equity at the time the offence was committed.
b) Full or partial suspension of the writing of new insurance policies in the same line or branch affected
by the offence, for up to two years.
II) The following shall apply to insurance intermediaries, ancillary service providers, and other participants:
a) A fine of up to two hundred times the base salary.
b) Suspension of the authorization to operate, the license, or the registration, for up to two years.
The penalty will be defined according to the criteria for graduation of penalty set forth herein and will be
made public. The Superintendency will define the means and formats of said publication, which must be
carried out immediately as soon as the penalty is definitive.
ARTICLE 40. Suspension of the Administrative Proceeding
Issuance of the final act of the punitive administrative proceeding may be suspended if the supervised
entity fully repairs the damage or equity losses caused to the injured parties by the offence. The
suspension will apply if it involves matters where the offence has solely affected equity interests and will
be conditioned to no relapse on the part of the offender in any other offence of said nature during the
suspension period. The suspension period may not exceed five years; once it ends the respective shelving
of the case will be dictated.
In order to be effective, agreements to repair damages and losses must be standardized by the
superintendent. Suspension will not apply when the acts have violated public trust.
The administrative act by means of which the proceeding is suspended will also interrupt the statute of
limitation. In the event of recurrence, the cases will be compounded so as to be conducted in a single
proceeding.
ARTICLE 41. Additional Penalties
When, upon punishing an insurer, reinsurer, intermediary, ancillary service provider, or other participant,
the Superintendency finds a director, representative, or employee of one of these entities willfully or
negligently responsible, it will impose on them one of the following penalties, regardless of other
applicable penalties:
In the case of intentional acts:
a) A public reprimand to be published, at the offender’s expense, in one of the largest national daily
newspapers. The certificates issued by the superintendent confirming the cost of publishing any
reprimands that may be imposed will be enforceable instruments.
b) A fine of fifty times the base salary.
In the case of negligent acts:
1) A fine of between fifty and one hundred times the base salary.
2) Barring from the exercise of administrative or management offices in entities subject to oversight by
the offices of the superintendents of financial institutions, securities, pensions, or insurance, for up to five
years.
ARTICLE 42. Illegal Exercise of the Activity
Without prejudice to the relevant criminal punishments, natural or legal persons offering insurance to the
public or engaging in insurance business, as such activities are defined in Article 3 hereof, without the
respective administrative authorization or, if pertinent, the respective license or registration, will be
punished with a fine of up to one thousand times the base salary for each confirmed violation. Motions
for revocation and appeals against this act will be admitted within three business days.
Entities that have been punished for illegal exercise of the activity under the terms of this article may not
apply for administrative authorization to exercise insurance activity until they have paid the fine, pursuant
to the first paragraph of this article.
ARTICLE 43. Collection of Fines
The debt certificate, substantiated by a firm resolution imposing the payment of fines, will have the nature
of an enforceable instrument when issued by the superintendent.
Fine amounts that have not been paid within the conceded payment period will generate an obligation to
pay legal interest and any pertinent personal and court costs.
ARTICLE 44. Statute of Limitation for Administrative Liability
The administrative liability of supervised parties for the offences provided herein will prescribe in four
years.
Said period will run from the moment the Superintendency learns of the events, when the alleged
irregular act is perceptible. Otherwise, where an investigation or audit is required to inform on the
potential irregularity of the acts, the period will run from the date on which the corresponding supervision
areas report on the respective investigation to the superintendent.
The statute of limitation will be interrupted when notice is given of the initiation of a punitive proceeding,
which without exception may not exceed two years.
TITLE III
FINAL PROVISIONS
CHAPTER I
SUNDRY PROVISIONS
ARTICLE 45. Policies with Sufficient Premiums
No insurance company may be obligated to write policies with insufficient premiums to cover the
insurance risk being applied for.
ARTICLE 46. Net Income for Tax Purposes
The net income of insurance companies and reinsurers will be the result of deducting from gross income
those expenses, reserves and technical provisions needed to ensure the proper operation of said entities.
The respective income tax payable will be calculated on the basis of this. For tax purposes, the General
Tax Office will issue a binding definition of the applicable technical limits for calculating the necessary
reserve and technical provision amounts, in order to determine the insurance company and reinsurers'
available earnings.
Accounting matters will be governed by the provisions set forth in the Income Tax Law.
ARTICLE 47. Authorization to Set Up Companies for Engaging in Insurance Activity
The following institutions are authorized for the purpose of engaging in insurance activity:
a) Cooperatives, solidarity associations, the Savings and Loan Association of the National Educators’
Association (Caja de Ahorro y Préstamo de la Asociación Nacional de Educadores), and the Pension and
Retirement Board (Junta de Pensiones y Jubilaciones) and Life Insurance Company (Sociedad de Seguros
de Vida) of the National Teachers’ Union, are authorized to set up, jointly or each as shareholder, one or
several companies for the sole corporate purpose of operating as insurance companies under the terms
of section (a) of Article 7 hereof. These companies may be set up with the National Insurance Institute.
The provisions herein for insurance companies shall apply, in every aspect, to all companies so
constituted.
b) The INS is authorized to set up, jointly with the State’s public banks, a single company with the sole
corporate purpose of exercising insurance activity under the terms of section (a) of Article 7 hereof.
c) The Banco Popular y de Desarrollo Comunal and INS are authorized to set up, jointly, a single company
with the sole corporate purpose of exercising insurance activity under the terms of section (a) of Article 7
hereof. Other social economy agents may participate in said company as shareholders.
For all cases of sections (b) and (c), at least fifty-one percent (51%) of the shares must be owned by INS.
The provisions herein for insurance companies shall apply, in every aspect, to these companies. None of
the companies created under this article will have a state guarantee.
ARTICLE 48. Provisions for Insurance Cooperatives
1) Legal Nature
First- and second-degree insurance cooperatives will be governed by the general provisions laid down in
the Law for Cooperative Associations and Creation of the National Institute of Cooperative Development
(Ley de Asociaciones Cooperativas y Creación del Instituto Nacional de Fomento Cooperativo) and the
special regulations set forth herein. All provisions hereof that have not been expressly excluded shall
govern insurance cooperatives.
Insurance cooperatives are private cooperative entities set up for the purpose of promoting insurance
among their members. Second-degree insurance cooperatives may write insurance policies for the
members of their member cooperatives. Insurance cooperatives shall solely and exclusively carry out acts
concerning the insurance activity defined herein.
2) Scope of Action
Insurance cooperatives may only write insurance policies for their members, who must be the holders of
the insurable interest at the time the policy is signed. The insurance policies cooperatives write for
management board and committee members, managers, and assistant managers will be regulated by
special provisions that must be contained in their bylaws and reported to the Superintendence.
3) Administrative Authorization of Insurance Cooperatives
No insurance cooperative that is set up may start activities without the authorization of the General
Insurance Superintendency, after meeting the requirements for insurance companies. The potential,
feasibility, and usefulness study set forth in Articles 32 and 33 of the Law for Cooperative Associations and
Creation of the National Institute of Cooperative Development (Ley de Asociaciones Cooperativas y
Creación del Instituto Nacional de Fomento Cooperativo) will be submitted to the Superintendencyfor
approval. The management board must have at least one outside member, not associated with the
cooperative or a relative to the third degree of consanguinity or kinship with board members or the
manager, of recognized integrity and demonstrated technical suitability.
The bylaws of these cooperatives and their modifications must meet the legal requirements for the
insurance activity. A denial of authorization or cancellation of administrative authorization by the
Superintendency will imply cancellation of the registration of the entities as insurance cooperatives in the
registry of cooperatives.
4) Member Withdrawal
The amounts represented by each member's certificates of contribution must be returned to the
members when they exercise their right to withdraw or are excluded, for any reason, pursuant to each
cooperative’s bylaw. The provisions in Articles 62 and 72 of the Law for Cooperative Associations and
Creation of the National Institute of Cooperative Development (Ley de Asociaciones Cooperativas y
Creación del Instituto Nacional de Fomento Cooperativo) shall apply for return of contributions.
5) Prohibitions
Members of the management board or the corresponding body may not participate in the voting on or
analysis of insurance policies in which they have a direct interest or which are of interest to their family
members up to the second degree of consanguinity or kinship. Cooperative insurance organizations may
not purchase products, merchandise, or real estate property that is not essential for their normal
operation. Insurance cooperatives are prohibited from writing insurance policies for non-member third
parties. For this purpose, the provisions of Article 9 of the Law for Cooperative Associations and Creation
of the National Institute of Cooperative Development (Ley de Asociaciones Cooperativas y Creación del
Instituto Nacional de Fomento Cooperativo), Law No. 4179 of August 22, 1968 and its amendments is
hereby declared inapplicable.
For the purposes of the penalty system, failure to comply with these prohibitions will be deemed a very
serious offence.
ARTICLE 49. Sale of Insurance at Cost
Section (i) of Article 6 of the Law for Cooperative Associations and Creation of the National Institute of
Cooperative Development (Ley de Asociaciones Cooperativas y Creación del Instituto Nacional de Fomento
Cooperativo), Law No. 4179, shall not apply to cooperative associations participating in the insurance
activity, whether directly or through corporations. The foregoing applies solely for the branches of
insurance authorized for these companies.
CHAPTER II
AMENDMENT OF OTHER LAWS
ARTICLE 50. Internal Audit of the National Financial System Supervisory Council (Consejo Nacional de
Supervisión del Sistema Financiero)
a) Article 171 bis is hereby added to the Stock Market Regulatory Law (Ley Reguladora del Mercado de
Valores), Law No. 7732 of December 17, 1997 and its amendments. The text shall read:
“Article 171 bis. Internal Audit
The National Financial System Supervisory Council (Consejo Nacional de Supervisión del Sistema
Financiero) will have an Internal Audit Unit whose primary function will be to confirm the compliance,
sufficiency, and validity of the internal control system established by the Administration of the General
Superintendencyof Financial Entities (Superintendencia General de Entidades Financieras), the General
Superintendencyof Securities (Superintendencia General de Valores) , the General Insurance
Superintendency (Superintendencia General de Seguros), and the Superintendencyof Pensions
(Superintendencia de Pensiones).
The Internal Audit Unit will report directly to the National Financial System Supervisory Council (Consejo
Nacional de Supervisión del Sistema Financiero) and will operate under the direction of an internal auditor
appointed by said Council with the vote of at least four of its members, pursuant to the procedures of the
Comptroller General of the Republic, in accordance with the General Internal Control Law (Ley General de
Control Interno), Law No. 8292 of July 31, 2002. The provisions in Articles 18, 19, 20, and 21 of the Organic
Law for the Central Bank of Costa Rica (Ley Orgánica del Banco Central de Costa Rica), Law No. 7558 of
November 3, 1995 shall apply to this officer.
The auditor may be removed in accordance with the provisions of the Organic Law for the Comptroller
General of the Republic (Ley Orgánica de la Contraloría General de la República) and will require the vote
of at least four members of the National Council. Each member’s vote will be nominal and reasoned, and
will be recorded in the minutes.
The internal auditor must attend National Council meetings, where he or she will have a voice but no
vote.”
b) Article 9 of the Stock Market Regulatory Law (Ley Reguladora del Mercado de Valores), Law No. 7732
of December 17, 1997 and its amendments is hereby revoked.
c) Article 39 of Law No. 7523, Private Supplementary Pension Regime and Amendments to the Stock
Market Regulatory Law and the Code of Commerce (Regimen Privado De Pensiones Complementarias Y
Reformas De La Ley Reguladora Del Mercado De Valores Y Del Código De Comercio), is hereby revoked.
d) Article 124 of the Organic Law for the Central Bank of Costa Rica (Ley Orgánica del Banco Central), Law
No. 7558 of November 3, 1995 and its amendments is hereby revoked.
ARTICLE 51. Amendment to Law No. 8131
Let the third from last paragraph of Article 1 of Law No. 8131, Financial Administration and Public Budgets
(Administración Financiera y Presupuestos Públicos), be amended. The text shall read:
“Article 1. Scope of Application
[.]
The provisions hereof shall not apply to public banks or the National Insurance Institute, except with
regard to the approval procedure for their budgets and as ordered in Articles 57 and 94 and Title X hereof.
[.]"
ARTICLE 52. National Insurance Institute
Let Law No. 12, Law for Insurance Monopoly and the National Insurance Institute (Ley del Monopolio de
Seguros y del Instituto Nacional de Seguros), of October 30, 1924, be comprehensively amended and
hereinafter be called the National Insurance Institute Law (Ley del instituto Nacional de Seguros). The text
is as follows:
“NATIONAL INSURANCE INSTITUTE LAW (LEY DEL INSTITUTO NACIONAL DE SEGUROS)
CHAPTER I
GENERAL PROVISIONS
Article 1. National Insurance Institute and its Activities
The National Insurance Institute, hereinafter referred to as INS (its Spanish acronym), is the State’s
autonomous insurance institution, with its own equity and legal personality and authorized to engage in
insurance and reinsurance activity. The regulations, oversight, and penalty regime provided for all
insurance entities shall apply to all said activities.
INS will be authorized to carry out all necessary technical, commercial, and financial actions, in accordance
with best business practices, including the possibility of rejecting underwriting when technically or
commercially so justified, and to define underwriting conditions and risk retention margins according to
its technical criteria and administrative policies. Decisions on the functions placed under its authority may
only come from its Board of Directors, which will be exclusively responsible for same.
INS will have the city of San Jose as its legal domicile and may have branch offices, agencies, or offices in
the rest of the country.
INS will have a full state guarantee in the development of its insurance activity in Costa Rica, which
includes the administration of commercial insurance, workers’ compensation insurance, and mandatory
vehicle insurance.
INS is authorized to set up or purchase shares of stock in corporations, commercial companies, branch
offices, agencies, or any other commercial entity or entity of a similar nature, none of which will have the
guarantee mentioned in the preceding paragraph, for the following purposes:
a) Exercise the activities entrusted to it by law within Costa Rica. Said activities include those of a financial
nature, the granting of loans, provision of health services and the services of the Corps of Firefighters,
provision of medical benefits, and the sale of goods acquired by INS by reason of its activities.
In addition, INS may set up, by itself or through its companies, strategic partnerships with public or private
entities in Costa Rica or abroad for the sole purpose of fulfilling its designated responsibilities.
Both INS and its companies may, with the approval of the respective boards of directors, take on debt
prudently in accordance with the respective financial studies. These transactions will not have a state
guarantee.
Public banks are authorized to participate as shareholders of the companies set up by INS as specified in
this article, as long as INS remains the majority shareholder of said companies.
Article 2. Application of Private Law
Acts generated in the exercise of its commercial insurance activity, acting as a common commercial
company, will be regulated by private law, such that in the exercise of insurance activity INS will be subject
to the jurisdiction of common courts.
Article 3. Planning
Annual, medium- and long-term institutional operating plans and the institution’s strategic plan, must be
approved by the INS Board of Directors. Their preparation, principles, and general requirements will be
regulated internally by the institute itself in accordance with sound management and business practices.
CHAPTER II
ORGANIZATION OF INS
Article 4. The Board of Directors and Chief Executive Officer
The institute will be administered by a Board of Directors comprised as follows:
a) A chief executive officer appointed by the Governing Council, of recognized experience and expertise
in the field of insurance, finance, or business administration, who will be the institute’s legal and out-ofcourt representative with the powers defined for universal power of attorney by Article 1253 of the Civil
Code (Código Civil). His or her actions will be governed by this law and additionally by Law No. 4646 of
October 20, 1970, which amends the membership of boards of directors of autonomous institutions, and
other relevant regulations. As chief executive officer, he or she shall have no impediment or prohibition
whatsoever for being a member of the boards of directors of the companies in which INS is a shareholder.
b) Six members elected by the Governing Council, who will be governed by the following provisions:
1) Where relevant, the law for board of director members of insurance entities will apply to them.
2) They must be Costa Rican citizens, be at least thirty years old, and have recognized experience or
extensive expertise in economic, financial, insurance, or business administration matters. They must have
a licentiate degree or equivalent professional title. At least one of them must have a licentiate degree in
Economics and another must have one in Law.
3) Their functions will be the exercise of the authorities conferred on them by law, without encompassing
exclusive administrative functions or interfering with the officers responsible for deciding on insurance
policy indemnification.
4) The provisions of Law No. 4646 of October 20, 1970 shall apply, where pertinent, to the dates of their
appointments, time in office, system of replacements and removals, and prohibitions and
incompatibilities.
5) They may not simultaneously be employees of the institute or employees, directors, or shareholders of
private insurance companies or other entities belonging to other financial groups.
Article 5. Functioning of the Board of Directors
The Board of Directors will exercise its functions with absolute independence and under its exclusive
responsibility, in accordance with the rules established by laws, relevant regulations, and the principles of
the technique. The provisions of Articles 22 and 23 of the Organic Law for the National Banking System of
September 26, 1953 and its amendments shall apply to members of the Board of Directors;
notwithstanding, acceptance of a commercial risk margin will not be a generating event for personal
liability, insofar as the risk has been adequately proportionate to the nature of the undertaking and the
members have not acted with malicious intent, culpability, or negligence, all in accordance with the rules
of sound administration.
The INS Board of Directors will be governed by the following provisions:
a) The Board of Directors will have the following functions and powers:
1) Dictate the institution’s general policies and exercise direction and strategic control of the institution
and its companies.
2) Ensure that the institution’s finances and those of its companies are sound.
3) Examine and approve or disapprove the institution’s budgets and audited financial statements. Define
the institution’s budget policy and review and authorize its budgets.
4) Approve development plans, the general policy for short-, medium- and long-term investments, and
borrowing plans.
5) Elect every year from among its members a vice chairperson to replace the chief executive officer in his
or her functions and responsibilities on the Board of Directors in the event of an absence or impediment,
and a secretary.
6) Appoint the manager, assistant managers, auditor, assistant auditor, secretary of the minutes, and
assistant secretary of the minutes, who cannot have been on the INS Board of Directors during the year
preceding their appointment.
7) Exercise the institution’s highest oversight to fulfill and ensure compliance with the institute’s duties
and powers and the legal and regulatory provisions governing its functioning.
8) Grant and revoke powers with the authorities and limitations the Board itself determines.
9) Hear and resolve matters submitted for its consideration by the business units or companies in which
INS has a shareholding.
10) Determine and approve the management structure of the institution and its companies.
11) Approve and amend its internal regulations on matters of human resource management and pay
policies.
12) Approve, reform, and interpret the institution’s regulations for their application.
13) Act as a shareholders’ meeting or shareholder, as relevant. In the latter case, it may delegate to the
chief executive officer the actions it expressly defines concerning the companies in which INS is sole or
partial shareholder, respectively.
14) Any other function or power corresponding to it by law or regulation.
b) Board of Director’ meetings will be governed by the following rules:
1) The INS Board of Directors will meet regularly at least once a month at the place, day, and time it
decides, and will hold special meetings, when absolutely necessary, any time it is called to meet for such
purpose, all in accordance with internal regulations.
2) Punctual attendance of Board members at meetings will give them the right to receive fixed per diems
as sole payment for the duties of this office. The amount of per diems will be periodically determined by
the Governing Council on the basis of reasonableness criteria and in accordance with the responsibilities
of the office and the national reality. No more than eight paid meetings may be held per month, including
regular and special meetings, the latter only when absolutely necessary.
3) A quorum will be constituted by four members in attendance and decisions will be made by majority
of votes present, except in cases where the law requires a determined special majority. In the event of a
tie, the chairperson will have the decisive casting vote.
4) In addition to its members, Board of Director meetings will be attended by the manager, who will have
a voice but no vote. Assistant managers, the auditor, and other officers will attend when invited, in the
same condition as the manager; notwithstanding, when deemed necessary, their opinions on the matters
under discussion may be recorded in the respective minutes. Attendance at Board of Director meetings
will not give officers who are not board members the right to collect additional pay. Persons invited
especially by the Board of Directors may also attend; notwithstanding, at the chairperson’s discretion the
Board may meet with only its members present.
When any of the Board meeting attendees, or his or her partners or relatives within the third degree of
consanguinity or kinship, has a personal interest in the processing of a transaction, he or she must
withdraw from the respective meeting while the matter of his or her interest is discussed and resolved;
this circumstance will be recorded in the respective minutes.
Article 6. Manager and Assistant Managers
The Board of Directors will appoint the manager and one or more assistant managers with the favorable
vote of at least five of its members. By motion of the chief executive officer and with same indicated
number of votes, the Board of Directors may augment or reduce the number of assistant managers.
Both manager and assistant managers will be subject to the same requirements, prohibitions, and cases
of termination provided herein for members of the Board of Directors, insofar as they apply, and the
following conditions:
a) They will remain in office for an indefinite term and may be removed by the decision of at least five
members of the Board of Directors.
b) They will have, indiscriminately, the institution’s legal and out-of-court representation, with the
authorities determined for universal powers of attorney in Article 1253 of the Civil Code (Código Civil).
The exercise of such authorities will be regulated by the Board of Directors.
c) The manager will be the highest ranking managing officer and will be responsible, together with the
assistant managers, for the institution's management. The assistant managers may replace the manager
in his or her temporary absences, as he or she decides.
d) The manager will be responsible to the Board of Directors for the institution’s efficient and proper
administrative operation. The assistant managers will be the top assistant heads under the manager’s
hierarchical authority.
e) The manager will have the following powers and duties:
1) Provide the chief executive officer and the Board of Directors with the regular, accurate, and full
information needed for ensuring the institution’s good governance and superior management.
2) Present the required draft regular and special budgets to the Board of Directors for approval, and
ensure their proper execution.
3) Propose to the Board of Directors the internal organizational structure plans, projects and changes and
new positions and services essential to the institution’s proper operation. The approved plans and
projects, once they become firm, will be administrative. The Ministry of Planning will be kept informed of
changes in the internal organizational structure and services being provided.
4) Appoint and dismiss the institution’s employees, pursuant to the applicable regulations for the
institution’s personnel. For the purposes of dismissal of employees, the manager will be the highest
administrative authority.
5) Handle relations with representatives from the Superintendency in accordance with the instructions
issued by the Board of Directors.
6) Resolve, ultimately, matters concerning underwriting and claims and all matters not reserved for
decision by the Board of Directors.
7) Delegate his or her powers to the assistant managers or other officers of the institution, except when
his or her personal intervention is legally mandatory.
8) Exercise the other functions and authorities corresponding to him or her in accordance with the law,
regulations, and other relevant provisions.
CHAPTER III
SPECIAL REGULATIONS FOR ADMINSTRATIVE PROCUREMENT BY THE NATIONAL INSURANCE INSTITUTE
Article 7. Relevant Law
The INS’s procurement activity will come under the general framework of the Administrative Procurement
Law (Ley de Contratación Administrativa), Law No. 7494 of May 2, 1995, save with regard to the special
regulations contained in this section herein. In all cases the constitutional principles of administrative
procurement shall apply.
Article 8. Time Periods and Special Procedures
For the INS’s procurement procedures and those of its companies that are subject to the procurement
regime of Law No. 7494, Administrative Procurement, of May 2, 1995, said entities and the Comptroller
General of the Republic will observe the following special provisions:
a) The time period for lodging appeals in public and abbreviated tenders will be five business days. The
Comptroller General of the Republic will have a maximum of twenty-five business days for issuing a final
resolution and five business days for an extension; this period includes the five business days for holding
the hearing.
b) The Comptroller General of the Republic must resolve on contracts requiring its approval within fifteen
business days from the management’s request. Failure to pronounce within this period will be construed
as “silence is consent”, as long as legal procedures have been followed, with the consequent responsibility
of the responsible employees. The Comptroller General of the Republic may not disapprove the contracts
mentioned in the preceding paragraph based on assessments of timeliness and appropriateness of the
technical aspects of the object being procured, unless an expert technical opinion confirms a threat to the
general interest or they are shown to be unlawful.
Article 9. Procurements Exempt from Regular Procurement Procedures
Being essential for the efficient conduct of its regular activity, and in order to enable INS to effectively
compete in an open market, and without prejudice to the provisions of Articles 2 and 2 bis of Law No.
7494, Administrative Procurement (Contratación Administrativa), of May 2, 1995 and its amendments,
the following types of procurement carried out by both INS and its companies that are subject to the
procurement regime of said law are exempt from the regular bidding procedures provided by said law:
a) Procurement for the acquisition, maintenance, and updating or leasing of technological equipment,
hardware and software, and information technology system development. Successful bidders will be
obligated to comply with delivery of the latest technological update of the awarded assets, unless this
does not satisfactorily address the institution’s needs.
b) Reinsurance contracts and their ancillary services. In these cases, the institution must preserve in the
file for each contract the technical and timeliness criteria substantiating each reinsurer’s participation in
that respective contract.
c) Trust agreements of any kind when acting as trustor, trustee, or beneficiary.
d) Procurement of insurance or financial intermediation services, including distribution of self-issue
insurance; procurement for outsourcing of services regularly provided by INS or its subsidiaries, such as
money collection, and of ancillary insurance services, as specified in the Stock Market Regulatory Law (Ley
Reguladora del Mercado de Valores).
e) Strategic partnerships formed with public or private entities for the purpose of engaging in and
improving activities entrusted to INS.
f) Contracts between INS and its companies, or companies in which it has a shareholding.
g) Purchase, leasing, and maintenance of real estate needed for developing the business of INS, for up to
an amount of fifty thousand development units (UD 50,000).
h) Contracts for advertising, communication, marketing, and corporate image, for up to an amount of fifty
thousand development units (UD 50,000).
i) Procurement of technical and professional advisory and consultancies concerning the business of INS,
for up to an amount of fifty thousand development units (UD 50,000).
j) Procurement of training services for up an amount of fifty development units (UD 50,000).
The procedures for these procurements will be approved by the INS Board of Directors, ensuring that the
appropriate general principles of administrative procurement are observed and that the procedure is
reasonable and proportionate to the purposes of the procurement. Actions are subject to control after
the fact by the Comptroller General of the Republic.
CHAPTER IV
SUNDRY PROVISIONS
Article 10. Earnings
INS’s net income will be the result of deducting from gross income those costs, expenses, reserves and
provisions needed to ensure said entity’s proper operation. The respective income tax payable will be
calculated on the basis of this. For tax purposes, the General Tax Office will issue a binding definition of
the applicable technical limits for calculating the necessary reserve and provision amounts, in order to
determine INS’s net earnings.
INS’s annual available earnings, after taxes and any other charges, will be distributed as follows:
a) Seventy-five percent (75%) will be earmarked for capitalization of the institution.
b) Twenty-five percent (25%) will be earmarked for the Costa Rican State.
Article 11. Elimination and Distribution of Economic Burdens
All burdens or economic contributions outside its activity that have been imposed on INS by law, except
for that of the Distinguished Corps of Firefighters, are hereby eliminated.
The amounts specified in Law No. 3418 of October 3, 1964, and its amendments regarding payment of
fees to international organizations by the State and public entities are included in the elimination
mentioned in the preceding paragraph.
Contributions directly related to the Workers Compensation Insurance regulated by the Labor Code
(Código de Trabajo) and to the Mandatory Automotive Vehicle Insurance (Seguro Obligatorio de Vehículos
Automotores) regulated by the Law for Traffic on Public and Overland Roads (Ley de Tránsito por Vías
Públicas Terrestres) will continue to operate mandatorily and universally and will be governed by the
provisions of the regulatory frameworks under which they are governed.
Likewise, INS’s mandatory occupational health contributions, pursuant to Article 205 of Law No. 6727 of
March 9, 1982, and harvest contributions pursuant to the Comprehensive Harvest Insurance Law (Ley de
Seguro Integral de Cosechas), Law No. 4461 of November 10, 1969 and its amendments remain exempt
from this provision.
Article 12. Handling of Confidential Information
Information obtained by INS from its policyholders or potential policyholders by virtue of insurance
policies, their execution, or their negotiations is confidential and may only be used for the purposes of the
business. Disclosure of this information to third parties is restricted, unless so requested by legally
competent authorities who can justify its need and the respective means.
Information on any INS activities classified by INS as an industrial, trade, or economic secret when for
competition, commercial and strategic reasons its disclosure to third parties is inappropriate, is also
confidential. This type of information may only be disclosed when the management so deems appropriate
or when legally competent authorities so request.
All information generated from negotiations, contracts, and the execution of insurance policies offered
by INS is the property of INS. INS employees or any third parties having access to this information must
observe the provisions in this article; furthermore, they must have INS’s express authorization to disclose
the information or use it in a manner other than the one authorized by INS.”
ARTICLE 53. Amendment to Law No. 8228
Let the following provisions of the Law for the Corps of Firefighters of the National Insurance Institute (Ley
del Cuerpo de Bomberos del Instituto Nacional de Seguros), Law No. 8228 of March 19, 2002, be amended:
a) The title is hereby amended. The text shall read:
“Law for the Distinguished Corps of Firefighters of Costa Rica (Ley del Benemérito Cuerpo de Bomberos de
Costa Rica)”
b) Articles 1, 2, 7, 8, 34, and 40 are hereby amended. The texts shall read:
“Article 1. Creation of the Distinguished Corps of Firefighters
Let the Distinguished Corps of Firefighters of Costa Rica, hereinafter the Corps of Firefighters, be created
as a fully autonomous entity under the National Insurance Institute (INS), with a domicile in San Jose and
authority throughout the national territory to fulfill the functions and responsibilities granted exclusively
to it by laws and regulations.
Article 2. Legal Personality
The Corps of Firefighters will have instrumental legal personality for the acts and contracts it takes on to
comply with the decisions of its Executive Council and perform the functions specified by law in matters
of budget management, administrative procurement, human resources, training, inter-institutional
coordination, emergency management, and other specific technical responsibilities.
To ensure the fulfillment of these ends, the fully autonomous body created herein will have the power to
execute its assigned budget, subject to the mandate of laws regulating such exercise. In addition to the
obligation set forth in section (a) of Article 40 hereof, the INS Board of Directors must order timely drafting
to the Corps of Firefighters Fund of the amounts of money it determines necessary, according to a
technical budget justification approved by the Comptroller General of the Republic, for the Corps of
Firefighters to be able to provide effective and efficient services to the Costa Rican public. Said
contributions will be deemed a deductible expense from the income tax payable by INS."
“Article 7. Organization
The Corps of Firefighters will operate under the direction of an Executive Council of the Distinguished
Corps of Firefighters of Costa Rica, hereinafter referred to as the Executive Council, which will consist of
five members of recognized moral solvency, who every year will elect a chairperson from among their
members. Three members will be appointed by the National Insurance Institute's Board of Directors, and
the two remaining members will be elected by employees of the Corps of Firefighters in accordance with
the Regulations hereof. They will remain in office for five years and may be reelected.
The Corps of Firefighters will be administered and represented by the general manager of the Corps of
Firefighters, who will take on its management duties.
The Corps of Firefighters will have the necessary operational, technical, and administrative units for
faithful fulfillment of its public duties and the necessary number of employees to meet its own operational
objectives; by means hereof it is authorized to create jobs and fill vacant positions.
Article 8. Infrastructure
The Executive Council will be responsible for authorizing the purchase of goods, furniture, and property
and the building or remodeling of infrastructure needed by the Corps of Firefighters for proper fulfillment
of its purposes. In the latter case, the Executive Council may delegate its authority to another
administrative body under the conditions determined by regulations and at all times according to its
available budget resources.
The minimum requirements for setting up a fire station, as well as any other building required by the
Corps of Firefighters, must take into consideration the technical studies and criteria for determining
location, characteristics, equipment, staff, sustainability, and other requirements to be established in the
regulations issued by the Executive Council for this purpose. In all cases, nationally or internationally
recognized sound practices in this matter must be observed.”
“Article 34. Assets of the Corps of Firefighters
All the assets and resources of the Corps of Firefighters of Costa Rica must be itemized and inventoried
accurately and precisely and must be used exclusively for the fulfillment of its purposes. Moveable goods
and real estate property being used by the Corps of Firefighters of Costa Rica will become part of its equity.
The delisting of these assets from INS inventories may be charged on INS income statements over the
following ten years as a deductible expense from the income tax paid by the institution, for which it will
take the book values of said assets. Moveable assets and real estate property of the Corps of Firefighters
are immune from confiscation.”
“Article 40. Funding of the Corps of Firefighters
Let the Corps of Firefighters Fund be created, to be used exclusively for funding the activities of said body.
The Fund will be comprised as follows:
a) Four percent (4%) of the premiums of all insurance sold in the country. The money collected for this
item by insurance companies must be drafted to the Corps of Firefighters Fund within the month following
its collection, at the latest, without any amounts being deducted for collection or administration expenses.
The General Insurance Superintendency will certify outstanding debts for this item; this certification will
constitute an enforceable instrument for the Distinguished Corps of Firefighters to collect on these debts.
For the purposes of this article, premiums generated from annuity policies established in the Worker
Protection Law (Ley de Protección al Trabajador), Law No. 7983 of February 2000 will not be taken into
consideration, nor may any aspect of them be taken into account for the established calculation.
b) The returns on trusts set up by the Corps of Firefighters.
c) The complementary contribution decided by the INS Board of Directors, referred to in the second
section of Article 2 hereof.
d) Fines, charges, or indemnities deriving from this law.
e) The interest and earnings generated by the Fund itself.
f) Donations from national or international entities.
State institutions are authorized to make donations to the Corps of Firefighters.
The Corps of Firefighters may set up trusts for administering the resources of the Corps of Firefighters
Fund. In this case, the Fund's resources must be invested under optimum conditions of low risk and high
liquidity; the resources and their management will be subject to control by the Comptroller General of
the Republic.”
c) Article 7 bis is hereby added. The text shall read:
“Article 7 bis. Executive Council Organization, Functions, Functioning, and Per Diems
The requirements, incompatibilities and grounds for dismissal provided for members of the Board of
Directors of the National Insurance Institute, with the exception of insurance activity regulations, will
apply to Executive Council members where reasonably appropriate. Furthermore, Executive Council
members may be freely removed from office by the Board of Directors of the National Insurance Institute
by a majority vote of five of its members.
The Executive Council will meet regularly at least once a month and will hold special meetings whenever
called by any of its members or by the manager of the Corps of Firefighters, without exceeding four special
meetings per month.
The general manager of the Corps of Firefighters will attend Executive Council meetings and will have a
voice but no vote. Notwithstanding, when deemed necessary, his or her opinions on matters under
discussion may be recorded in the respective minutes. Nevertheless, the Executive Council may meet with
only its members in attendance, whenever it so decides.
The Executive Council’s organization and functioning will be governed, where relevant, by the chapter in
the General Public Administration Law (Ley General de Administración Pública) regarding collective bodies
and by the provisions in the Regulations hereof.
The functions of the Executive Council of the Corps of Firefighters of Costa Rica include:
a) Define and authorize the organization of the Corps of Firefighters of Costa Rica, including creating jobs
and defining and assigning the authorities of the functional, operational, technical, and administrative
units needed for effective and efficient performance of its public duties.
b) Issue the necessary organization and service regulations for proper performance of the Corps of
Firefighters’ functions.
c) Appoint the general manager of the Corps of Firefighters, by means of internal recruitment on the basis
of references, pursuant to relevant law. If a suitable candidate is not found within the organization, a
public competition will be held.
d) Remove the general manager of the Corps of Firefighters, following due process.
e) Appoint and remove the internal auditor, in accordance with the process indicated in the General
Internal Control Law (Ley General de Control Interno), Law No. 8292 of July 31, 2002, and the Organic Law
for the Comptroller General of the Republic (Ley Orgánica de la Contraloría General de la República), Law
No. 7428 of September 7, 1994.
f) Issue technical standards and ordinances on matters of safety, fire protection, and human security,
which will be of mandatory observance by natural or legal persons and public or private entities.
g) Hear, and resolve in appeal, motions filed against the resolutions dictated by the general manager of
the Corps of Firefighters. The Executive Council’s resolutions will exhaust the administrative channel.
h) Approve the strategic plan and annual operational plan.
i) Decide on budgets and their modifications and settlement, and remit the respective documents to the
Comptroller General of the Republic for final approval.
j) Oversee compliance with the control or technical provisions of authorities with jurisdiction over the
Corps of Firefighters.
k) Define the rates the Corps of Firefighters will charge for providing special services and their variations,
which will be established in the Regulations hereof.
l) All other functions provided by law.
Members of the Executive Council will receive a per diem for each meeting, the amount of which will be
equal to fifty percent (50%) of the per diems received by members of the INS Board of Directors, unless
they are employees of the same institution and the meetings are held during business hours, in which
case they will have no right to any pay.”
ARTICLE 54. Amendment to Law No. 8204
Let Article 14 of Law No. 8204, Comprehensive Reform of the Law on Narcotics, Psychotropic Substances,
Unauthorized Drugs and Related Activities (Reforma Integral de la Ley sobre Estupefacientes, Sustancias
Psicotrópicas, Drogas de Uso no Autorizado y Actividades Conexas), of December 26, 2001 be amended
to include section (d). The text shall read:
“Article 14. The entities that regulate, supervise, and oversee the following bodies, as appropriate, are
considered to be subject to the obligations hereof:
a) The General Financial Entity Superintendency (SUGEF),
b) The General Security Superintendency (SUGEVAL),
c) The Pension Superintendency (SUPEN), and
d) The General Insurance Superintendency.
The obligations of this law also apply to all member entities or companies of the financial groups
supervised by the above bodies, including financial transactions made by banks or financial entities
domiciled abroad through financial entities domiciled in Costa Rica. For these ends, the aforementioned
financial group entities are not required to comply anew with the registration indicated in Article 15
below, but are subject to supervision by the respective body with regard to money laundering.”
ARTICLE 55. Amendment to Law No. 7293
Let a new final paragraph be added to Article 8 of the Regulatory Law for Existing Exemptions and their
Revocation and Exceptions (Ley Reguladora de Exoneraciones Vigentes), Law No. 7293 of March 31, 1992.
The text shall read:
“Article 8.
[...]
Purchases made by the Corps of Firefighters in accordance with its functions will be exempt from duties,
tariffs, and surcharges for purchases of fire extinguishers; ambulances and vehicles to be converted into
fire extinguishing units or ambulances; support vehicles; portable generators; portable pumps; equipment
and articles for firefighting, rescue and hazardous material emergencies; communication equipment and
electronic equipment for emergency response; replacement parts, tires and maintenance items for the
extinguishing units, ambulances, vehicles and equipment for firefighting, rescue and hazardous material
emergencies; personal protective equipment for firefighting, rescue and hazardous material emergencies;
foaming agents and dry chemical powders for firefighting; medicines, fuels and lubricants; and items and
goods of a similar nature necessary for fulfilling its purposes.”
ARTICLE 56. Amendment to Law No. 7472
Let Article 27 bis be added to Law No. 7472, Promotion of Competition and Effective Consumer Protection
(Ley de Promoción de la Competencia y Defensa Efectiva del Consumidor), of December 20, 1994. The text
shall read:
“Article 27 bis. Relations with Financial System Supervisors
Relations between the Commission for the Promotion of Competition and the General of Financial Entity
Superintendency, the General Securities Superintendency, the Pension Superintendency, and the General
Insurance Superintendency, hereinafter the “offices of the superintendents”, will be governed by the
following rules:
a) Concentration Processes
The offices of the superintendents have the obligation to authorize, in advance, assignments of portfolios,
mergers, acquisitions, changes of shareholder control, and other concentration processes defined herein
that are carried out by the entities under their supervision.
When a request for authorization is received, the offices of the superintendents must consult with the
Commission for the Promotion of Competition on the effects such concentration processes might have on
the level of competition.
The Commission’s opinion must be rendered within fifteen business days from the date of request by the
Superintendence. Said opinion is not binding; notwithstanding, the Superintendency must justify its
resolution should it decide not to agree with such opinion.
b) Initiation of Punitive Proceedings
The Commission for the Promotion of Competition (Comisión para Promover la Competencia) will have
the authority to determine and punish vertical or horizontal monopolistic practices in the markets
supervised by the offices of the superintendents.
When initiating punitive proceedings for acts in violation hereof in which a supervised entity of the
financial system has participated, the Commission will request the opinion of the respective
Superintendence. Said report will be rendered within fifteen business days from the date of the
Commission’s request.
The opinion of the Superintendency will not be binding on the Commission; notwithstanding, in cases
where the Superintendency expressly warns of the need to prevent a punitive action from endangering
the stability of the financial system, the Commission must justify its resolution in order to validate taking
a separate stand from the technical body’s opinion.
c) Obligation of Superintendents
Superintendents must report to the Commission for the Promotion of Competition (Comisión para
Promover la Competencia) any of the anti-competitive practices described herein of which they receive
knowledge that are being engaged in by the supervised entities and member or related companies of their
financial groups or conglomerates. The Superintendency may intervene as an interested party in the
respective proceedings.”
ARTICLE 57. Amendment to Law No. 33
Let Law No. 33, Law for Reorganization of the National Insurance Institute (Ley de Reorganización del
Instituto Nacional de Seguros), of December 23, 1936, be revoked.
CHAPTER III
TRANSITIONAL PROVISIONS
TRANSITIONAL CLAUSE I. Organization of the General Insurance Superintendency
When this law goes into effect the National Council will have up to ninety days to decide if they will appoint
an insurance superintendent and intendant or temporarily assign their duties, for a maximum period of
eighteen months, to one of the other financial system supervisory bodies under their direction for the
purpose of facilitating the task of organizing the new entity. In this event it must define, by reasoned
resolution, the temporary working structure and may appoint the respective insurance intendant.
During eighteen months the Superintendence, or in its absence, the entity to which its functions have
been assigned, pursuant to the preceding paragraph, is excused from obligatory application of the regular
procedures laid down in the Administrative Procurement Law for purchasing the materials, goods, and
services needed for setting up the entity.
TRANSITIONAL CLAUSE II. Internal Audit Unit of the National Financial System Supervisory Council
(Consejo Nacional de Supervisión del Sistema Financiero).
The National Council will have six months from the date this law takes effect to execute the restructuring
of the organizational and human resources that at the date of enactment hereof are part of the Internal
Audit’s administrative units, whose existence cease with revocation of the legal provisions that created
them. The restructuring plan includes appointment of an internal auditor pursuant to the provisions of
Article 31 of the General Internal Control Law (Ley General de Control Interno), Law No. 8292 of September
4, 2002; until this appointment is made, the internal auditors of the three disappearing administrative
units will continue to exercise their functions and one of them will be assigned the oversight tasks of the
General Insurance Superintendency. The restructuring plan set forth in this transitional clause will be
governed by the provisions laid down for such purpose in the Autonomous Regulation of Central Bank of
Costa Rica Services (Reglamento Autónomo de Servicios del Banco Central de Costa Rica).
TRANSITIONAL CLAUSE III. Opening Up of Mandatory Insurance Provision
The State will maintain its monopoly on the Workers Compensation Insurance and Mandatory Automobile
Insurance administered by the National Insurance Institute, pursuant to the provisions of Title IV of the
Labor Code (Código de Trabajo) and the Law for Traffic on Public and Overland Roads (Ley de Tránsito por
Vías Públicas Terrestres), respectively.
As of January 1, 2011, the Superintendency will grant, when so requested, administrative authorization
for engaging in insurance activity in the branches of mandatory vehicle insurance and mandatory workers
compensation insurance to the entities indicated in sections (a) and (b) of Article 7 hereof, as long as they
meet the terms, conditions and specifications to be set forth in the regulations dictated for such purpose
by the National Council in accordance with national law.
TRANSITIONAL CLAUSE IV. Portfolio Transfer and Liquidation
The voluntary insurance portfolio of the Life Insurance Company (Sociedad de Seguros de Vida) of the
National Teachers’ Union must be transferred to an authorized insurance company or, in its absence,
liquidated within eighteen months from the date of the regulation issued by the Superintendency for such
purpose.
TRANSITIONAL CLAUSE V. Insurance Agent Accreditation
The Superintendency will grant, at its own initiative, the insurance agent license provided in Article 20
hereof to natural persons who are authorized as agents by INS at the time this law enters into effect. For
this purpose, the institution must remit the list of said agents within one month, in accordance with the
information required by the Superintendence. Likewise, it will provide information on agents who are
currently suspended and the reasons and term of the suspension. INS will also indicate in this document
the insurance agents and agencies it will accredit for comprising its distribution network, as provided
herein. Said companies will be deemed insurance agencies and must adapt their articles of association to
the provisions of Title I, Chapter IV hereof within six months.
Contracts in effect between INS and its intermediaries will maintain that condition, pursuant to the
agreement between the parties, except for any changes that must be incorporated by virtue of the new
law.
Pursuant to Article 23 hereof, the State’s public banks will have six months from the date this law enters
into effect to set up the company indicated herein. During this time they may continue to operate as INS
intermediaries in the manner agreed with INS.
TRANSITIONAL CLAUSE VI. Issuance of Regulations
The National Council will issue, within nine months after this law enters into effect, the regulations under
its responsibility pursuant hereto.
The superintendent will regulate matters of cross-border trade in insurance services through a general
provision until the respective regulations are issued.
TRANSITIONAL CLAUSE VII. Capitalization of Profits
Let INS be authorized to capitalize the liquid profits that by law it must draft to the State, corresponding
to the five yearly periods following approval hereof. The purpose of the foregoing is to capitalize the
minimum capital and regulatory capital requirement and, in general, to prepare financially to meet the
requirements herein and confront the new market conditions. If in the opinion of the Board of Directors
there are remaining net earnings that are not required for the aforementioned purposes, the Board may
decide to draft part or all of the respective percentage to the Corps of Firefighters Fund to strengthen the
Fund.
TRANSITIONAL CLAUSE VIII. Administrative and Budgetary Transition of the Corps of Firefighters
INS will contribute, within six months after this law takes force, the sum of fifteen million development
units (UD 15,000,000.00) to the Corps of Firefighters Fund, pursuant to Law No. 8507 of April 28, 2006, to
be used for funding the operations of the Corps of Firefighters. This contribution will be considered a tax
credit for the income tax INS has to pay; it must be credited in equal amounts in the next three fiscal years
starting after the year it was drafted.
INS will continue allocating the administrative and operational resources needed for operation of the
Corps of Firefighters for a period of up to twelve months. The Corps of Firefighters will execute the budget
INS has assigned to it for the 2008 period within the framework of its full autonomy.
For application of the provisions in Article 34 of Law No. 8228, INS will have twelve months to make the
transfer in donation through the institution’s in-house notaries. Should divestiture of land be required,
INS will bear the cost of the in-house notary fees.
For fulfillment of its objectives, the Corps of Firefighters will not be subject, for a twelve-month period, to
the provisions regarding budget policy set forth in Articles 21, 23, and 24 of Law No. 8131, Financial
Administration of the Republic and Public Budgets, of September 18, 2001.
TRANSITIONAL CLAUSE IX. Adjustment of Company Business Names
Pursuant to the provisions in section (b) of Article 29 hereof, a period of six months from the date this law
takes force is conceded for the companies registered in the Public Registry to adjust their business names.
Upon expiry of this period, the Public Registry, at its own initiative, will eliminate any inappropriate terms.
TRANSITIONAL CLAUSE X. Regulations of Law No. 8204
Pursuant to the provisions of Article 54 hereof, the National Financial System Supervisory Council (Consejo
Nacional de Supervisión del Sistema Financiero) will change, where relevant, the regulations for
compliance with Law No. 8204, Comprehensive Reform of the Law on Narcotics, Psychotropic Substances,
Unauthorized Drugs and Related Activities (Ley sobre estupefacientes, sustancias psicotrópicas, drogas de
uso no autorizado y actividades conexas).
In the same order, the Executive Branch (Poder Ejecutivo) will update the regulations of said law pursuant
to the provisions of Article 165 thereof.
This law shall take effect upon its publication.
Given at the Office of the President of the Republic, San Jose, on the twenty-second day of the month of
July in the year two thousand eight.