The European Commission approved a €1.5 bn reinsurance scheme to cover war-related transport risks in Ukraine. Poland backs the scheme, which supports insurance for freight transport across Ukrainian territory.
The initiative aims to sustain trade routes between Ukraine and the European Union, particularly through Poland, which shares the EU’s longest land border with Ukraine.
The scheme approved (April 3) 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
Teresa Ribera, EC executive vice president
Poland’s export credit agency KUKE will provide the reinsurance. It covers losses caused by military action, sabotage, terrorism, uprisings, and riots.
Insurers operating in Poland will offer the policies, while KUKE will assume 80% of the war risk. Insurers will retain the remaining 20%. KUKE will charge a premium after deducting acquisition and administrative costs.
Only insurers authorized in Poland can participate. Transport companies registered in Poland or other EU states with branches in Poland will qualify for coverage if they are licensed to carry out freight transport services. The reinsurance applies only to war-related risks. Standard commercial transport risks fall outside the scheme’s scope.
The scheme remedies a market gap in the provision of insurance for war-related risks incurred by transport companies due to the ongoing Russian military aggression in Ukraine, the EC said.
The program will run until June 30, 2027. The European Commission confirmed it addresses a market gap in war risk coverage created by the conflict in Ukraine.
The scheme includes safeguards to prevent disruption of competition within the EU. It is open to all insurers authorized in Poland, including new market entrants, and all eligible freight operators.
“Poland has put in place sufficient safeguards to ensure that the scheme has a limited impact on competition and trade within the EU,” the EC said. “In particular, the scheme is open to all insurance companies already authorized in Poland as well as to new entrants to the Polish insurance market”.
The participating insurance companies will also retain a sufficient level of risk. Furthermore, the scheme is open to all transport companies authorized to provide their services in Poland.
Separately, MS Amlin confirmed it placed a reinsurance program for small and medium businesses in Ukraine. The facility may provide up to €5bn in coverage over five years.
MS Amlin committed €80mn in capacity initially, with a potential increase to €110mn. The support applies to war risk policies issued by Ukrainian insurers INGO, Colonnade, and Uniqa.
The project was developed with the European Bank for Reconstruction and Development and Aon. Backed by an EBRD guarantee, the structure allows MS Amlin to remove the risk from its balance sheet.
The goal is to restore Ukraine’s local risk insurance market by enabling domestic insurers to offer inland cargo and transport coverage to SMEs.
