Costa Rica public insurance

Volcan Arenal, La Fortuna Costa Rica. © Arturo Sotillo CC BY-SA 2.0

Costa Rica

In Costa Rica, the World Bank has been working with the public insurance company (INS) to design a dedicated vehicle to be able to insure public assets at a lower cost than currently available. The proposed vehicle allows for the Government of Costa Rica to retain most of the risk while transferring only excess losses to international financial markets.

By retaining the lower risk layers through reserves, complemented by a simple guarantee or through a contingent line of credit, the Costa Rican Government takes a calculated and limited risk, while ceding the part of the exposure that it is not willing to assume. Preliminary analyses show that the proposed vehicle would improve coverage with a net savings of at least US$5 million every year.

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