Space risks: What is insured?

Space insurance primarily covers: satellite hardware and satellite performance; launch vehicle (rocket) performance and third party liabilities.

Space insurance buyers could be: satellite constructors (if “in-orbit delivery” – for both launch vehicle and satellite cost); satellite owners/operators (if “ground delivery” – for both launch vehicle and satellite cost); launch services agencies (for launch risk guarantees offered to their clients); end users (or certain “transponders” or services on the satellite). All of the above may also purchase liability insurance.

Why buy space insurance?

There are some reasons for which we should by space insurance.

The first one is remote location. Once launched, a satellite cannot be brought into a workshop for repair.

The second one is high value of satellite. The price of a launch vehicle and a satellite is from US$ 50 to 100 million and from 50 to 200 million, respectively; while the insurance cost is from US$ 10 to 60 million.

The third reason is the high risk of loss. The risk changes by stages. In the stage of pre-launch, the risk is only from 0.25 to 0.5%. The stage of launch vehicle flight is the most risky one with the risk of upto 5 to 30%. The second most risky stage is post-separation and commissioning with 5 to 10%. And in-orbit stage is the second least risky stage with only 1.3 to 3.5%.

The last but not least is that lost revenues and additional expenses, in case of risks, are really significant. Moreover, it takes from 18 to 36 months to build and launch a replacement satellite.

Source: Documents of Willis International Aviation Insurance Course 2010.