The majority of space insurers are also aviation insurers. Space insurance premium forms an important part of their portfolios.
Number of insurers and overall market capacity
There are only about space insurers worldwide with their theoretical capacity of US$ 732 million for launch risks and US$ 674 million for in-orbit risks. But the realistic working capacity per risk is even lower: only US$ 544 million for launch risks and US$ 460 million for in-orbit risks.
In the last 10 years, annual premium has ranged from US$ 500 million to US$ 1 billion and annual claims have ranged from US$ 65 million to US$ 1.6 billion.
Insured interests
Top sum insured was approximately US$ 350 million and is US$ 250 million in average. Typically there are no more than 20 commercially insured launches per year, and less than 200 satellites insured in-orbit.
Premium rates
Premium rates vary depending on past experience, technical profile and prevailing market conditions:
- Launch +1 year in orbit rates: 10.5-13%
- In-orbit rates: 1.3%- more than 3%
- Liability rates: rough average 0.1%
Premium & claims history
2007 was an overall market loss. Premium income was approximately US$ 650 million but claims accounted for approximately US$ 750 million. It was the first overall market loss in the last 5 years.
2008 marked a return to profitability. Premium income was approximately US$ 750 million while claims made up only US$ 350 million with 1 launch failure (total loss) and 3 satellite anomalies.
2009 also made large profits. Estimated premium income was from US$ 800 to US$ 825 million while incurred claims was estimated to date of only 427 million.
Conclusions
Space sector continues to develop because of HDTV, broadband applications, increasing use of earth imaging for commercial and environmental applications, mobile applications, range of satellites to cater for developing or established markets and most current project funded prior to economic downturn.
An important role in space insurance is due to levels of financing and relatively high physical risk. Space insurance is previewed to get profit continuously and to be supported by technical underwriting and differentiation between risks.
Source: Documents of Willis International Aviation Insurance Course 2010