Sergio Alfaro, president of the National Insurance Institute of Costa Rica (Spanish initials: INS), indicated during a recent press conference that the marchamo (mandatory vehicle registration) process will begin the first week of November. This annual process, which requires the purchase of a liability insurance policy, has resulted in very handsome profits for INS over the last two years due to the sharp growth of car culture in Costa Rica. For 2015, however, the Superintendency of Insurance (Spanish acronym: SUGESE) has ordered a reduction in policy premiums.

 

In 2013 and 2014, the INS realized a profit increase up to six percent and well over forecasts. Aggressive marketing by auto dealers and a burgeoning subprime auto loan market has increased the number of cars in Costa Rica, which has resulted in gridlock and lower air quality levels in the Greater San Jose Metropolitan Area (Spanish acronym: GAM). The relaxed underwriting guidelines for car loans in Costa Rica has also generated greater demand for fossil fuels and a nascent auto repossession and brokerage industry.

 

As reported by Radio Columbia 98.7 FM, the greater presence of cars circulating in Costa Rica has prompted SUGESE to order a nationwide premium insurance reduction to cap the profits of the INS monopoly. Privately-owned vehicles will pay nine percent less in 2015 than they did for this year. This does not necessarily mean, however, that the marchamo fee will be reduced as well. Vehicle owners must still pay ad valorem taxes, outstanding fines, municipal fees, contributions to safety funds, etc.

 

The marchamo process in Costa Rica is intricate and expensive. As previously reported by The Costa Rica Star, some banks are even offering special financing for marchamo payments, and the most common traffic citation issued in our country related to driving without having satisfied this requirement, which results in a fine less than $100 and confiscation of license plates plus an order to tow the vehicle away.

 

The most efficient method of marchamo renewal is offered by INS online. The insurance monopoly is currently engaged in heavy marketing of its roadside assistance service, which has improved and grown significantly in Costa Rica and is highly recommended to drivers. This service starts at about $15 per year (for motorcycles).