Insurance companies balk with new coverage for space launch

According to industry sources, the amount of space debris continues to grow, threatening satellites hovering around the globe, and insurers hesitate to provide coverage for devices that send text, maps, videos, and scientific data. doing.

Thousands of new satellites have been launched in areas of orbital debris accumulation since the early space missions nearly 65 years ago. The surge in collision risk has caused a handful of insurers providing satellite coverage to retreat or withdraw from the market, executives and analysts said.

“This is a real problem for insurance,” said Richard Parker, co-founder of Asure Space, a unit of Amtrust Financial.

More than a year ago, the company stopped offering low earth orbit (LEO) spacecraft insurance, where most satellites are in operation. Some policies that have been sold since then exclude collision damage.

“As more insurers recognize this as a significant risk that we can’t even get a weapon, it will be harder to get this kind of insurance in the near future, Parker told Reuters. There is a possibility. “

According to Seradata, which tracks statistics, there are 8,055 satellites orbiting the Earth, 42% of which are inactive. Most operate on LEOs that extend 2,000 km (1,243 miles) across the globe.

The number of active satellites has increased by 68% from a year ago and more than 200% from five years ago.

Much of the new activity comes from billionaire Elon Musk’s SpaceX to extend Starlink broadband networks.

SpaceX did not respond to the request for comment. As a privately held company, we do not disclose whether the satellite is insured.

Other major companies, including Google, Apple, and Amazon, rely on satellites to send data, as do carriers, government agencies, and universities working on space research, insurance sources said. ..

According to Seradata, space insurance is a lucrative niche market for insurers, receiving a total premium of $ 475 million last year to cover satellites, rockets and unmanned spaceflight, for just $ 425 million. I paid the loss.

Space premiums are 10 to 20 times higher than aviation premiums, said Peter Elson, CEO of insurance broker Gallagher Aerospace.

“This is a dangerous business in the first place,” he said.

Space turmoil

The insurance dilemma emphasizes a bigger problem. No one has cleared up the turmoil of the universe.

Government agencies are tracking thousands of debris, including in a “graveyard orbit” where old geosynchronous orbit (GEO) satellites are sent to die in space at 36,000 km (22,370 miles), the last fuel.

LEO satellites are much smaller than GEO satellites. According to industry experts, it’s usually the size of a small refrigerator, requiring $ 500,000 to $ 1 million worth of compensation, well below GEO’s $ 200 million to $ 300 million.

Historically, policies have protected devices from loss, failure, or damage from orbital launches, but not loss of revenue from outages. Operators can add liability insurance in case one satellite re-enters the atmosphere in a way that causes damage to another satellite or causes damage or injury to the ground.

About half of the new satellite launches are currently insured, said Denis Bousquet, an executive at AXA XL’s space business. Industry sources are hoping for more policies to rule out collision compensation and reduce the number of satellites insured.

“The concentration of debris and the increasing number of satellites deployed increase the likelihood of a collision,” said Charles Wetton, space policy underwriting manager for insurance company Global Aerospace.

Debris Cemetery

According to Seradata, only 11 spacecraft have suffered partial or total breakdowns due to suspected debris collisions in the last decade, and insurers’ concerns are almost theoretical so far. It has become.

However, as insurers anticipate risk over the life of current and future insurance policies, space insurers suffer from the worst scenarios years ahead.

Wetton quoted the possibility of the “Kessler effect”, named after NASA’s space debris expert Don Kessler, who developed the theory in 1978.

There are no signs that such a situation is imminent, but it will make the entire orbit uninsured, Wetton said.

Asurespace Parker said he was confident that a major clash would occur within the next three years, making it nearly impossible to get insurance.

New insurers may enter the market to ease supply and demand tensions. Until then, industry experts have stated that businesses, universities and government agencies are likely to have more financial responsibility.

Taxpayers can also end up hooking more often.

In June, the Export-Import Bank of the United States (EXIM) approved the launch of SpaceX, as well as the launch of the Spanish telecommunications network Hispasat SA and $ 80.7 million in orbital insurance financing.

“With EXIM funding available, SpaceX and other US exporters can remain competitive,” said James Cruz, First Vice President and Vice Chairman of EXIM.

By Noor Zainab Hussain and Carolyn Cohn