Space insurance supports growth of new applications
Insurance issues relating to the space industry will take centre stage at an international conference to be held in Abu Dhabi in May, when experts from across the world will discuss market conditions for the sector's future at the Global Space & Satellite Forum (GSSF).
According to Christian Barnabe, Executive Vice President, International Space Brokers, one of the key speakers at GSSF 2011, which is being held at ADNEC on 9-11 May 2011, the insurance issues are increasingly broader-based.
"At one time satellites were the domain of a few governments and public telecom companies, but the private sector has increasingly pushed into the sector and the need for innovative insurance models that cover the industry have been on the rise,” he said.
"It is no longer about offering launch insurance for putting a simple telecom satellite into space; insurance brokers and insurers work actively on the design of new products that cover a diverse range of space risks.”
Currently space insurance models consider the risks associated with the launch of spacecraft into orbit and the risks associated with the satellite mission once it is in orbit.
The launch services industry is an established commercial field of expertise that has been around for several decades with new developments continuing to be made. Its accumulated experience has resulted in an improved reliability, which in turn has resulted in launch insurance costs falling dramatically.
"The same is true for satellite operations in-orbit. Despite the diversity and complexity of commercial satellite missions, manufacturers have managed to improve the overall reliability of their products over the years, which in turn has led to constantly decreasing in-orbit insurance costs,” added Barnabe.
The success of the commercial space industry pushes operators and manufacturers to develop new business models and new products, such as telecom, military-hosted payloads or commercial earth observation satellites.
“International companies are researching projects to put all manner of items into space,” said Nick Webb, Director, Streamline Marketing Group, organisers of the Global Space and Satellite Forum (GSSF) 2011.
“Earth observation is one area that is growing rapidly, but putting in place the appropriate insurance package that considers the specific risks of such missions isn't easy,” added Webb.
For example third party liability is one of the critical aspects of earth observation missions that opens a Pandora's Box for insurers.
"Third party liability is a topic that throws up all sorts of questions for insurers and companies looking to build a viable earth observation business," Barnabe said. "It would seem obvious that when one considers the increased number of new satellites and additional space debris in low earth orbits, a satellite operator would automatically buy third party liability insurance.
"The reality is somewhat different, as earth observation satellite operators are currently mainly government entities which self-insure their risks.”
Things are moving rapidly with the emergence of commercial earth observation satellite operators and with the development of risk management strategies led by forward-thinking governments. Some internal resistance might still be faced with certain entities but Barnabe believes it is possible to convince them to develop new risk management strategies.
"Ultimately everything comes down to risk management, but to find out what the risks are we need to understand precisely what's involved. What is the environment? What technology is being used and how does it relate to the mission or the business plan?
“Which risks can be retained and which should be transferred to the insurance market? The list is long, but by processing the amount of data available we can build viable risk management models that will see new applications become a success," said Barnabe.
Stay up to date
Subscribe to the free Times Aerospace newsletter and receive the latest content every week. We'll never share your email address.
