Poland’s export credit agency Kuke has secured approvals from the European Commission for a reinsurance scheme that will boost coverage for Polish companies transporting goods into Ukraine.
On April 4, the EU’s executive arm announced it had greenlit Kuke’s €1.5bn initiative, which was first mooted 18 months ago and aims to plug a gap in war-risk insurance for transport companies operating on Ukrainian soil.
Kuke will cover domestic insurers when they issue policies to Polish transport companies or European firms with a branch in Poland, reinsuring war risks such as military damage, acts of sabotage and rioting.
The agency will backstop insurers for 80% of a policy’s value, with the private insurers absorbing 20% of the risk.
Kuke’s CEO Janusz Wladyczak says the scheme will facilitate Polish exports to Ukraine by increasing the number of entities offering transport services.
“We are the first country and the first export credit agency with a transport reinsurance programme covering the territory of Ukraine, which was initiated and approved by the EC. It will bring benefits in many dimensions,” he says.
Kuke is already holding talks with domestic insurers and expects that policies will soon be offered for transport operators in Ukraine.
According to Wladyczak, it will cover both Polish freight and potentially also goods from other EU members. “[The scheme] will provide support to the Polish transport industry, which remains a leader in Europe, but due to the ongoing Russian aggression, it could not secure insurance coverage on the commercial market and did not carry out transport in the territory of Ukraine,” he adds.
The export credit agency has been a major insurer of Polish exports to Ukraine since mid-2022, helping Ukrainian firms purchase vital goods such as foods, plastics and metals worth hundreds of millions of dollars.
Collectively, European and Asian export credit agencies have announced commitments worth billions of dollars for Ukraine’s reconstruction plan that, according to World Bank estimates, will cost US$349bn.
Kuke first floated the scheme in late 2023 and had been waiting for the European Commission to confirm it complied with EU state aid rules.
In an April 4 statement, the Commission says the scheme is “necessary, appropriate and proportionate” to facilitate transport services that are “essential to conducting trade” between Ukraine and the EU.
“No purely private market solutions are available…. The scheme has an incentive effect, as the beneficiaries would not carry out the relevant activities without the public support,” the Commission says.
It notes that Poland has put in place “sufficient safeguards” to ensure a minimal impact on competition and trade within the EU.
“In particular, the scheme is open to all insurance companies already authorised 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,” it says.
Commercial risks are not covered under the scheme, which will be in place until June 30, 2027.
