BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
The recent launch of a commercial satellite atop a new type of rocket may shake up the staid space launch insurance market, experts say.
Hawthorne, Calif.-based Space Exploration Technologies Corp.'s Dec. 3 deployment's of the SES-8 satellite from its Falcon 9 rocket is an important development for the industry and the companies that insure it, said Jeff Poliseno, Washington-based CEO at Aon International Space Brokers.
“The launch went off perfectly and hit all the orbital parameters,” he said. “Many people in the industry consider it a game-changing event for SpaceX to demonstrate that they can pull off the mission at the price point they offer.”
With the successful satellite deployment, SpaceX alters the calculus of an industry long dominated by two major launch platforms, according to Mr. Poliseno. Those platforms are France's Ariane series, made by Arianespace S.A., and Russia's Proton rocket, manufactured by the Khrunichev Space Center. “Adding a third major player is very beneficial to the industry as a whole and to the insurance industry because it offers a diversity of risk,” he said.
Sima Adhya, London-based head of space at Torus Insurance Holdings Ltd., said SpaceX is not the only organization looking to crack the market for satellite launch.
“For the last decade or longer, the commercial launch industry has been dominated by two vehicles — the Proton and the Ariane — but now we are seeing other vehicles from private companies and other space-faring nations,” Ms. Adhya said. “Overall, this is a good thing, but it does bring insurance challenges. However, once these new vehicles prove themselves, it will be a healthier environment for both satellite operators and insurers.”
The new launch technologies employed by these companies will require careful consideration by underwriters, Ms. Adhya said.
“As underwriters, we prefer to insure technologies that have a proven flight heritage but, on the other hand, are keen to support new entrants into the market,” she said.
Newer companies in the field can find sufficient coverage. “We look at each case individually,” she said. “A lot depends on who the operator is and what type of oversight they have had. In the case of SpaceX, we do take a degree of comfort in the fact that NASA has been involved.”
Jan Schmidt, director and head of space for Swiss Re Corporate Solutions, said the fact that SpaceX was tapped to deliver a satellite by Luxembourg-based satellite operator SES S.A. helped validate the upstart launch company in the eyes of many. “It speaks well for SpaceX that SES, the second-largest satellite operator in the world, is launching such an important satellite on a Falcon 9,” he said. “It underlines the positive perception people have for the Falcon 9 rocket.”
Mr. Schmidt stressed that an understanding of the underlying rocket technology is just one part of the underwriting process.
“Part of our underwriting process is a very thorough risk assessment of the satellite payload and launch vehicle,” he said. “Apart from the technical aspects, the underwriters also assess the commercial aspects of the risk, such as the experience and engineering capabilities of the operator as well as the loss experience and what orbit the satellite will be operated in.”
Thorough assessment by underwriters notwithstanding, buyers of space launch insurance can expect a buyer's market given the amount of market capacity, Mr. Schmidt said. “In terms of premium, it's probably the lowest levels we have seen in the market. The question is whether this is sustainable.”
An insurance broker, who did not want to be identified, said that two large claims this year have pushed the space market to the brink of making a loss for 2013.
With the market generating only $700 million to $900 million in premium a year, it takes just a few losses to make a year unprofitable for insurers, he said.