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RISKS OF HURTLING THROUGH SPACE

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VENICE, Italy-Satellites are at risk of being damaged by meteor showers and space debris while in orbit, which could create multi-billion dollar losses if multiple orbiters were knocked out of commission by the same event.

Intense meteor storms are expected to hit the earth's atmosphere in 1998 and 1999, with major peaks hitting during the fall, cautioned keynote speaker Benito Pagnanelli, deputy general manager of Assicurazioni Generali S.p.A. in Trieste, Italy.

These meteor showers could be the most intense in more than 30 years, he said during Generali's biennial space insurance conference last month.

Underwriters should begin to evaluate the "economic impact on the insurance market" should such a meteor storm damage even some of the 90 insured satellites in orbit with a combined insured value exceeding $16 billion, said Mr. Pagnanelli.

"All the satellites in orbit could be affected" and not just some satellites in certain sectors around the earth, added Giovanni Gobbo, vice director in charge of the space department at Generali.

But how they will be affected no one knows since the last time there was such an intense storm, 32 years ago, there was only a handful of spacecraft in orbit.

"It might not have any effect at all," said Mr. Gobbo. On the other hand, there is a risk that meteor fragments could create small holes or damage a vital aspect of a satellite, making it inoperable, he said.

The potential for losses from the meteor storm, while unknown, are so high that scientists recommend that there be no manned space missions during this period, said Per Englesson, department manager and space underwriter for Skandia International Insurance Corp. in Stockholm, Sweden.

Satellite owners could take action by maneuvering their spacecraft in such a way so as to minimize any damage, noted Mr. Englesson. "What worries me is that when I recently asked executives of two different satellite manufacturers about their risk-curtailing measures in respect (of the meteor showers), they seemed totally unaware of it."

Even before the meteor showers, the number of claims for satellites in orbit "has reached unprecedented numbers last year and this year," Mr. Englesson added. "Some were insured and some were not."

In-orbit claims this year already total about $132 million from a single claim while last year they reached $156 million, according to International Space Brokers Inc., a consortium of New York-based Frank Crystal & Co., London-based Crawley Warren & Co. Ltd. Inc. and Paris-based Groupe Le Blanc de Nicolay.

Many of these claims could be attributed to technical problems, giving rise to the loss of life of a satellite, said Mr. Englesson.

But the satellites in orbit are "constantly exposed to a hostile environment," Mr. Englesson noted. The 11-year solar flare cycle, for example, will peak at the turn of the century and could affect particularly lower-earth-orbit satellites for such services as mobile telephone use.

Earlier this year, the Telstar 401 satellite had a massive power failure for unexplained reasons that made it completely inoperable, added Mr. Englesson. The satellite was insured in orbit for $132.5 million (BI, Jan. 20).

Pollution of space also could become a major risk for satellites in orbit and for people on the ground as the amount of space debris increases, Mr. Pagnanelli told Generali conference delegates.

The scientific theory that manmade objects left in space will disintegrate on impact with the earth's atmosphere "may no longer be valid, as metal alloys that are now used to manufacture new generation satellites and launchers are increasingly resistant and are able to survive that impact," said Mr. Pagnanelli.

For example, last April a component from a Delta rocket landed in the outskirts of Georgetown, Tex-as. There have been more than 16,000 re-entries of various objects in the last several decades, noted Dario Di Vicenz of the space department of Generali.

Satellites and launch vehicles in orbit are more likely than people on the ground, however, to be hit by space debris. Already 13 windows of various space shuttles have been damaged by debris in the past 16 months, Mr. Di Vicenz said.

Space debris and the risk of it colliding with spacecraft in orbit also could lead to the problem of "third-party liability deriving from activities in space," said Mr. Pagnanelli. "Generally speaking, this problem has been underestimated even by insurers."

Underwriters do not offer third-party liability insurance for satellite owners during launch or in orbit, according to Mr. Pagnanelli. Only some of the launch companies, such as Arianespace, offer third-party liability cover during a launch.

Some underwriters say that if debris caused a loss in space, the satellite owner's product liability insurance might cover third-party claims. "I'm not so sure," said Mr. Pagnanelli.

There are no existing claims related to space debris at the moment, said Mr. Pagnanelli. "I expect, though, that there were some cases (of debris causing damage) which were not insured and there was no claim. It is not easy to identify if something went wrong because of debris or a meteor storm or whatever."

Mr. Pagnanelli said that losses from space debris should not be taken out of proportion, as it is not yet a major problem. "We don't want to be ridiculous and say this is a real danger, but it is something that should be a matter of concern for the future," he said. "If the skies continue to be polluted, it could generate a big problem in the future."