The first challenge to the National Insurance Institute’s (INS) 85-year monopoly in Costa Rica comes from Mapfre Costa Rica, a subsidiary of a powerful Spanish insurer with a large international presence and many years of experience.
In June, Mapfre obtained authorization to sell its auto insurance policy, called Póliza Líder (top policy), which is surprisingly similar to INS’ familiar Auto policy, which we all love to hate. However, there are some differences which I will summarize here.
1. Getting Insurance. The process of insuring a vehicle with Mapfre is similar to INS: there are no binders; the agent or broker must see and take pictures of the vehicle on four sides; the applicant must sign the application form and the Conozca Su Cliente form, which is an anti-money-laundering requirement, and the premium must be paid. Copies of several documents are required. When all things are complete and correct, the broker will take the client’s money or credit card information, issue a receipt, and the vehicle will be insured right away. The insurance company will send the policy a few days later.
2. Insured Period. Unlike INS’ Auto policy that goes for six-month periods, Mapfre’s Póliza Líder is a monthly policy: you can’t get coverage or pay for a longer period. This has the advantage that if the policy has to be tinkered with, it can be done at the rollover date and there are no fiddly calculations of adjustment premiums; if it has to be canceled, it is hardly worthwhile to ask for the refund of a few days’ premium.
3. Renewals. The client is encouraged to allow Mapfre to charge his or her debit/credit card or bank account every month. This is not to everyone’s liking: I, for one, am old-fashioned and reluctant to authorize third parties to charge my accounts – but undoubtedly, it does streamline things, it’s one thing less to worry about, and – of course – you could earn miles! But if someone does not want his account charged automatically by Mapfre he can so indicate, and the agent/broker will be responsible for dropping by every month to pick up a check. In my opinion, this option is fraught, because a monthly visit to collect for renewal will eat into the agent’s commission so, unless the policy is a huge one, he may neglect the renewals.
4. Eligible Vehicles. Any form of motorized transportation that runs on roads can be insured by INS. Mapfre, however, only wants to insure the cream of the crop: cars and SUVs, minibuses up to 15 passengers, and trucks or vans up to 10 tons capacity. Coverage for direct damage is only offered for vehicles less than 15 years old: vehicles 20 years old or more cannot be insured at all – not even for liability (third party). Motorcycles can only be insured if they are part of an insured fleet. No taxis, semis, trailers, buses, rental cars, duty unpaid vehicles, etc.
5. Coverages. These are equivalent on both INS’ and Mapfre’s policies: liability, collision, theft and other risks. If you pay a surcharge you can insure additional risks, such as floods, landslides, volcanoes, vandalism, fire, lightning, partial theft, theft of contents from within the car, benefit of a rental car during repairs, etc.
6. Roadside Assistance. Mapfre offers roadside assistance coverage, free, on all Líder policies. INS, however, only offers free roadside assistance to vehicles with full coverage; if you have less than full coverage you have to pay an additional premium amounting to about $12 per six months – and vehicles have to be less than 20 years old.
7. Insured Value. Just like INS, Mapfre puts the onus on the client to establish the insured value of the vehicle, based on market value. Too high, and you will pay a higher premium to no avail. Too low, and repairs to your vehicle will be paid a prorrata. Like INS, Mapfre will not automatically reduce the insured value of insured vehicles as they depreciate.
8. Discounts. Mapfre offers a 50 percent discount for brand-new vehicles insured at the dealer’s showroom, 20 percent for vehicles up to 6 years old, up to 55 percent off for family groups, and up to 45 percent off for few claims. Important: Mapfre’s discounts are not cumulative; they will apply the highest rate only. INS is hurriedly changing its Auto policy to allow discounts as good or better than Mapfre’s. Ah, the benefits of competition!
9. Bonuses and Surcharges. If you go for an extended period without making a claim, both insurance companies routinely give you a No-Claims discount on your premium. If you have many costly claims, they can eliminate the bonus and maybe apply a surcharge. Mapfre will apply to your Póliza Líder your No-Claims bonus earned while you were insured through INS. Interestingly, Mapfre will not carry over from INS any surcharges you may have – so if you have a surcharge on an INS policy it might suit you to switch your coverage to Mapfre.
10. Deductibles. INS has traditionally only had two schedules of deductibles: a fixed deductible, or a percentage of the damage with an in-built minimum. I think we are going to see INS change this in the short run to keep up with Mapfre, which is more flexible and offers five different plans to suit clients’ needs.
11. Premiums. It’s hard to make a one-on-one comparison, because of the non-matching discount and deductible schedules between INS and Mapfre, but it can be assumed that their costs will be quite similar. Interestingly, INS has offered to match any premium where the quote from the competition is lower than theirs. An awakening is due: it seems that INS does not yet realize that competition is not only about price, it’s also about customer service and satisfaction.
12. Claims. Whereas INS puts the onus on the client to do the leg work and confront considerable bureaucracy, Mapfre basically takes charge: they will arrange for tow trucks and pay for them, they will negotiate with selected repair shops and present an estimate for approval of the client, etc. They will follow up on the repair, guaranteeing completion in four days for slight damage, eight to 15 days for medium, and 20 to 30 days for considerable damage. When the car is fixed, the client has to go to the repair shop to inspect and pick it up. If all is OK he must pay the deductible to the repair shop at this time. In comparison with the ordeals that some people suffer with INS, this sounds excellent!