The European Commission (EC) has approved a €1.5 billion (US$1.66 billion) state-backed transportation reinsurance scheme for Ukraine, led by Poland, that will cover war-related risks within Ukrainian territory.
The program, aimed at supporting insurance for transport activities in Ukraine, is intended to help maintain and enable trade flows between Ukraine and the European Union through Poland, the EC said.
Poland shares the EU’s longest land border with Ukraine, a route that has been significantly affected by the conflict with Russia.
Teresa Ribera (pictured above), EC executive vice president for clean, just and competitive transition, said the scheme is designed to sustain the movement of goods between Ukraine and the EU despite disruptions caused by the war, while minimizing potential distortions to competition.
The reinsurance scheme was brought before the commission by Poland. Under the plan, Poland’s public export credit agency KUKE will provide reinsurance for war-related risks – including damages resulting from direct military activity, sabotage, terrorism, uprisings, and riots – to insurers offering transport coverage in Ukraine.
Direct beneficiaries of the program will be insurance companies authorized to operate in Poland. Indirect beneficiaries include transportation firms authorized in Poland to deliver goods into Ukraine.
Eligibility for reinsurance extends to transport companies registered in Poland and licensed to operate freight services for hire or reward, as well as transport firms from other EU member states that maintain a branch in Poland. The reinsurance framework will remain in effect until June 30, 2027.
Under the structure of the public reinsurance arrangement, KUKE will assume 80% of the war-related risk exposure, while private insurers will retain the remaining 20%. Insurers will pay a risk premium to KUKE after deducting a commission fee that covers acquisition and administrative costs.
Elsewhere, MS Amlin has also finalized its own reinsurance agreement that could enable up to €1 billion in annual coverage for small and medium-sized enterprises (SMEs) in Ukraine.
The facility, developed in coordination with the European Bank for Reconstruction and Development (EBRD) and Aon, is structured to help revive Ukraine’s war risk insurance market by supporting local insurers offering inland cargo and transport coverage.
Earlier this year, McGill and Partners also unveiled a war risk reinsurance facility for commercial properties, offering coverage up to $50 million per risk for assets located more than 100 kilometers from the front line.
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