Demand for satellite services such as television broadcasting and Internet connectivity is keeping the space insurance market in a profitable orbit even as coverage rates drift lower.

The financial crisis has led to a cutback in demand for many consumer products and services, but that has had only a slight effect on those that come from space, sources say. Satellite launches have continued apace during recent years as TV, radio, Internet and mobile telephone service providers have expanded their offerings.

“The financial crisis has caused some projects to be pushed out a little further,” Christopher Kunstadter, senior vp with XL Capital Ltd. unit XL Insurance in New York, said of satellite launches. “There may have been some programs that were delayed, but essentially the financial crisis has not had an impact on space.”

“The market continues to be strong and healthy,” said Mark Quinn, Bethesda, Md.-based senior vp of Willis Inspace, a specialist space division of Willis Group Holdings P.L.C. “Last year was a profitable year for the market, with $825 million in premiums on $400 million in claims,” he said, noting that seven of the past eight years have been profitable for space insurers.

“What we have seen is the satellite industry had been fairly well insulated from the effects of the financial crisis,” Mr. Quinn said of satellite operators. “One reason is that they have long-term contracts with their customers, which tend to be large, strong companies, so operators have been able to maintain or increase their revenue levels.”

“Our clients have had very good years,” said Jeffrey Poliseno, CEO with Rosslyn, Va.-based International Space Brokers Inc., Aon Corp.'s space practice. “There has been an expansion of mobile technology on the satellite side and growth in the field from (high-definition) TV. The satellite side has been extremely lucky that it has not been affected by the financial crisis to the degree others have.”

As insurer profits have risen, rates for space insurance dropped as much as 10% to 15% for in-orbit and launch risks in the past year, sources said.

“The market is softening, and we anticipate that it will continue to soften,” Mr. Quinn said.

Mr. Kunstadter, though, said the direction of rates is difficult to predict. “It's easy enough to look at what is planned in terms of launches, insurance placements and what insured values will be,” he said. “But pricing is driven by capacity and experience; we don't know what tomorrow's experience will be.”

Space market profits have led some insurers to increase their capacity for satellite risks. Others have entered the market, including Lloyd's of London insurer Kiln Ltd., which began writing the coverage in November 2009 from an office in Paris.

Sources said new capacity has totaled as much as $53 million during the past year from existing insurers and new entrants into the space market.

There is plenty of capacity, with as much as $773 million in “theoretical capacity” available this year, up from $720 million a year ago, said Mr. Poliseno. “We advise on actual capacity, which is the largest line we have seen an insurer put down on any one risk,” an amount that stands at $565 million, he said.

“The market is growing,” said Benito Pagnanelli, president of Pagnanelli Risk Solutions Ltd. in London and a widely recognized expert on space insurance. “Whenever there is a year with some profit, (new insurers) come in to see if there is a piece of the profit for them the next year....There is no problem with capacity.”

Capacity is sufficient even with the increasing cost of satellites and launch services, Mr. Poliseno said. That could change if problems crop up. If large losses were to hit the market, “we could see capacity dry up quickly,” he said.

Satellites generally carry insured values of around $250 million to $275 million, experts say.

Once a satellite is safely in space, its mission is far from risk-free. “There is still the problem of debris,” Mr. Pagnanelli said. “There is much concern about that in the space market.”

The market suffered a major loss from space junk in February 2009 when a defunct Russian military satellite, Cosmos 2251, collided with Iridium 33, a U.S. communications satellite owned by Iridium Satellite L.L.C. in Bethesda, Md. NASA said the collision was the first known between two satellites.

“Space debris is something that has always been taken into account by manufacturers, operators and launch providers,” Willis Inspace's Mr. Quinn said. “Different participants in the industry rely on very sophisticated models” that can provide some help in preventing satellites from colliding with space debris, he said.

Modeling and satellite monitoring services remain the best ways to lower the chance of damage from a hit by space junk, Mr. Quinn said. “At the end of the day, the risk is very low, so there is confidence that what is being done is appropriate.”

“The design of spacecraft is as robust as it can be,” Mr. Quinn added. “Components and the technology are built to withstand the debris environment. Manufacturers and operators have always looked at this seriously.”