Launch into space? Not so fast. Insurers balk at new coverage
September 1 (Reuters) – An ever-increasing amount of space debris threatens the satellites that hover around the Earth, making insurers reluctant to offer coverage to devices that transmit texts, maps, videos and scientific data, industry sources said.
Thousands of new satellites are being launched into areas where orbital waste has accumulated since the first space missions almost 65 years ago. The increase in collision risk has left the handful of insurers that offer satellite coverage to pull out or exit the market, executives and analysts said.
“It’s a real problem for insurance,” said Richard Parker, co-founder of Assure Space, a unit of AmTrust Financial.
Over a year ago, the company stopped providing insurance for low Earth orbit (LEO) spacecraft where most satellites operate. The few policies she has since sold exclude collision damage.
âIt may become difficult to get this type of coverage in the near future as more and more insurers realize that this is a significant risk that we cannot even get around,â said Parker to Reuters.
There are 8,055 satellites roaming Earth’s orbits, 42 percent of which are inactive, according to Seradata, who tracks the statistics. Most operate in the LEO, which stretches 2,000 kilometers, or 1,243 miles, beyond Earth.
The number of active satellites has jumped 68% from a year ago and more than 200% from five years ago.
Much of the new business has come from billionaire Elon Musk’s SpaceX, as it expands its Starlink broadband network. Read more
SpaceX did not respond to requests for comment. As a private company, it does not disclose whether its satellites are insured.
Other big companies, including Google, Apple and Amazon, also rely on satellites to transmit data, as do telecom providers, government agencies and universities working on space research, sources from assurance.
Space coverage has been a lucrative niche for insurers, who collected $ 475 million in gross premiums last year to cover satellites, rockets and unmanned space flights and paid just $ 425 million in gross premiums. losses, according to Seradata.
Space premiums are 10 to 20 times aviation premiums, said Peter Elson, CEO of insurance broker Gallagher Aerospace.
âIt’s a risky business in the first place,â he said.
THE BIG IN SPACE
The insurance dilemma highlights a bigger problem: No one is cleaning up the mess in space.
Government agencies track down thousands of debris, including inside a “graveyard orbit” where old satellites in geostationary orbit (GEO) are sent to die with their last bits of fuel, 36,000 kilometers or so. 22,370 miles in space.
LEO satellites are much smaller than GEO satellites. Typically the size of a small refrigerator, they need $ 500,000 to $ 1 million in coverage, well below the $ 200 to $ 300 million for those at GEO, industry experts have said.
Historically, policies have protected aircraft from loss, failure, or damage from launch to their in-orbit lifespan, but not loss of revenue due to outages. Operators could add liability coverage in the event that one satellite damages another or re-enters the atmosphere in a way that causes damage or injury to the ground.
About half of new satellite launches are now assured, said Denis Bousquet, an executive in the space business of AXA XL. Industry sources expect more policies to exclude collision coverage and fewer satellites to be insured.
“Concentrations of debris and the increasing number of deployed satellites increase the potential for collisions,” said Charles Wetton, head of space policy at insurer Global Aerospace.
According to Seradata, only 11 spacecraft have suffered partial or complete failure due to suspected collisions with debris over the past decade, making the concerns of insurers largely moot for now.
Yet, as insurers predict risks over the lifespan of current and future policies, space insurers worry about doomsday scenarios for years to come.
Wetton raised the possibility of a “Kessler effect”, named after NASA space debris expert Don Kessler who developed the theory in 1978. He predicts that LEO will become so crowded that there will be a cascade of collisions.
There is no sign that such a situation is imminent, but it would make entire orbits uninsurable, Wetton said.
Parker of Assure Space has expressed confidence that a major collision will occur within the next three years, making insurance nearly impossible to obtain.
New insurers can enter the market to ease the tensions between supply and demand. Until then, industry experts have said businesses, universities and government agencies will likely bear greater financial responsibility.
Taxpayers can also find themselves hooked more often.
In June, the Export-Import Bank of the United States (EXIM) approved $ 80.7 million in funding for a SpaceX launch as well as launch and in-orbit insurance for Spain’s Hispasat SA communications network. .
âThe availability of funding from EXIM allows SpaceX and other US exporters to remain competitive,â said James Cruse, interim senior vice president and vice president of EXIM.
Reporting by Noor Zainab Hussain in Bengaluru and Carolyn Cohn in London and additional reporting by Eva Mathews; Graphic by Subrat Patnaik Editing by Lauren Tara LaCapra and David Gregorio
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