Although launching satellites appears to be a routine operation to the general public, there are still major risks involved. A branch of the insurance sector specifically covers the commercial space sector's operations. The main risks covered still tend to be a failure at launch or mechanical troubles for telecommunications satellites (with different types of satellite insurance coverage) (Table 7.1). If losses occur, they tend to happen 83% of the time in the very first phases of the space systems' lifetime, either because of a malfunction of the rocket during launch or because of a satellite's breakdown during the first month of operations (Figure 7.2). The space insurance industry generates around USD 750 to USD 800 million a year. After several rocket failures in 1998 and 2001, in recent years space insurers have seen their profits rise and have lowered premium rates. Premium rates paid by satellite operators depend mainly on the reliability over time of the launch vehicles and satellite platforms they use. There are still relatively few satellites insured compared to the mass sent to orbit every year, some 40 per year out of the hundred launched every year (Figure 7.3). In 2010, out of the almost 1 000 operational satellites in orbit, about 175 commercial satellites are insured for a total value of some USD 170 billion (XL Capital, 2010). Approximately 36 commercial launches carrying 23 GEO satellites and 25 LEO satellites could be insured each year through 2013. Five operators have nearly 50% of the in-orbit fleet, and 48 operators split the remainder.
In addition to insuring commercial satellites, two new segments for space insurance could develop over the next decade: space tourism via suborbital trips, and commercial flights of goods and provisions to the international space station. The insurance market traditionally thrives on volume. So as long as these potential future activities remain niche markets, premiums rates and possible exclusions will remain high (Pagnanelli Risk Solutions, 2009).
Coverage for the spacecraft, launch system and any additional costs from intentional ignition of the launch vehicle until spacecraft separation.
Launch - post-separation
Included as an additional coverage to launch, provides for the full deployment and operation of the satellite from separation from launch vehicle until satellite reaches its intended orbital position through in-orbit testing.
Protects against the risk of a complete or partial failure of the satellite while operating in space.
Provides protection against the loss of one or more transponders being used on an operating satellite.
Satellite incentive coverage
Protects satellite manufacturers against loss of incentive payments due to lack of guaranteed performance of a satellite.
Launch risk guarantee
Provides for the full (or partial) cost for another launch if the satellite fails to reach its intended orbit, is destroyed, or if its functions are impaired resulting from a launch vehicle malfunction.
Indicator in PDF
7.2. Occurrence of satellite's failures during first year of operations
7.3. Estimates on the number of satellites insured (1994-2013)