EU approves Poland’s 1.5 billion euro Ukraine transport reinsurance scheme

By Ryan Hewlett

April 7 - (The Insurer) - Poland’s state-backed reinsurance scheme has been approved by the European Commission with the structure set to deploy 1.5 billion euros ($1.64 billion) in cover for transport in Ukraine.

The scheme, which will run to June 30, 2027, has been designed to help maintain and facilitate trade flows between Ukraine and Poland that have been disrupted by the conflict with Russia.

According to the European Commission, Poland’s public export credit agency KUKE will provide the reinsurance, which covers war-related risks such as damage resulting from direct military operations, acts of sabotage, terrorism, uprisings and riots, to insurers offering cover for transport in Ukraine.

Standard commercial risks associated with the transport of goods are not covered by the scheme.

KUKE will cover 80% of the war-related risks, while private (re)insurers companies will retain the remaining 20%.

Insurers operating under the scheme will pay premiums directly to KUKE to ensure continued and adequate risk assessment and pricing.

Poland, the EU member state with the longest land border with Ukraine, said the intended direct beneficiaries of the scheme will be companies authorised to provide insurance services in Poland.

Indirect beneficiaries will be transport companies authorised to provide their services in Poland and delivering goods on the territory of Ukraine, it said.

“The scheme approved today will contribute to maintaining and facilitating transport of goods between the EU and Ukraine, disrupted by the ongoing Russian aggression, while ensuring that any potential competition distortions are kept to a minimum,” said Teresa Ribera, the European Commission’s executive vice president for clean, just and competitive transition.

The launch of Poland’s state-backed transport reinsurance scheme comes less than a month after MS Amlin bound the first risks on a landmark war risk reinsurance facility that could provide up to 1 billion euros in cover annually for SMEs in Ukraine.

The Ukraine Recovery and Reconstruction Guarantee Facility, developed in partnership with the European Bank for Reconstruction and Development and Aon, aims to revitalise Ukraine’s war risk insurance market by enabling local insurers to begin offering inland cargo and transport cover for SMEs.

Under the facility, first unveiled in December last year, MS Amlin has committed 80 million euros in reinsurance capacity, rising to 110 million euros over five years, to support war risk policies underwritten by three Ukrainian insurers: INGO, Colonnade and UNIQA.