Kuke, Poland’s export credit agency, has successfully obtained approvals from the European Commission for a reinsurance scheme aimed at enhancing coverage for Polish companies engaged in transporting goods into Ukraine. This initiative, with a total value of €1.5 billion, was initially proposed 18 months ago and is designed to address the lack of war-risk insurance for transportation companies operating in Ukraine.
Under the scheme, Kuke will provide coverage to domestic insurers when issuing policies to Polish transport companies or European entities with a presence in Poland. The reinsurance will specifically cover risks such as military damage, acts of sabotage, and rioting, with Kuke backing insurers for 80% of the policy’s value while the remaining 20% is absorbed by the private insurers.
Janusz Wladyczak, CEO of Kuke, highlights that this program will facilitate Polish exports to Ukraine by expanding the pool of entities offering transport services. He emphasizes that Poland is the first country and Kuke is the first export credit agency to implement a transport reinsurance program covering the territory of Ukraine, which has received approval from the European Commission. Wladyczak anticipates that policies for transport operators in Ukraine will be available soon, covering both Polish and potentially other EU member goods.
Kuke has been a significant insurer of Polish exports to Ukraine since mid-2022, supporting Ukrainian firms in purchasing essential goods like foods, plastics, and metals valued at hundreds of millions of dollars. In line with the broader efforts for Ukraine’s reconstruction, various European and Asian export credit agencies have committed billions of dollars towards the country’s reconstruction plan, estimated by the World Bank to cost US$349 billion.
The reinsurance scheme, initially proposed in late 2023, has now received confirmation from the European Commission that it complies with EU state aid rules. The Commission deems the scheme necessary, appropriate, and proportionate in facilitating essential transport services crucial for trade between Ukraine and the EU. It also acknowledges that there are no purely private market solutions available and that the scheme has an incentive effect, encouraging activities that would not be carried out without public support.
The Commission further assures that Poland has implemented sufficient safeguards to minimize any negative impact on competition and trade within the EU. The scheme is open to all insurance companies authorized in Poland, as well as new entrants to the Polish insurance market. Additionally, participating insurance companies are required to retain a sufficient level of risk. It is important to note that commercial risks are not covered under the scheme, which is set to remain in effect until June 30, 2027.
In conclusion, Kuke’s €1.5 billion transport reinsurance scheme for Ukraine represents a significant step towards supporting Polish exports and facilitating trade between Ukraine and the EU. With the backing of the European Commission and the commitment to upholding competition and trade standards, this initiative is poised to have a positive impact on the transport industry and contribute to Ukraine’s reconstruction efforts.
