Welcome to a brand-new capsule exploring the space industry. Today is a slightly peculiar topic at first glance, as we are going to discuss the “wonderful” world of space insurance. But fret not, I promise it’ll be more interesting than the topic would initially suggest. So, with that being said, let’s start talking insurance.
Insurance for Space Missions
What It’s for
Let’s start at the beginning. Space insurance is just like any type of insurance: a means to protect some asset in case something goes wrong. And with space launches, this is especially important, as there is a real chance of a launch not being successful, no matter how much safer these have gotten over the years. And so, for anyone looking to send a payload into orbit, it is crucial to insure it throughout its journey.
Insuring a Launch
But what exactly is a payload’s journey? Well, for insurance purposes at least, it can be broken down into 3 distinct phases. The first is pre-launch insurance. This will cover everything that happens during a launch campaign, from shipping to satellite preparation and integration on the launcher. This can even cover launch failure in some cases. Next is the launch insurance. This phase deals with all the risks that can occur from the start of the launch to when the satellite is placed in orbit. We then have in-orbit insurance. Between the risk of technical malfunctions and collisions due to orbital debris — a problem that is also being exacerbated by the number of launches — insuring a satellite’s time in space is also crucial.
There is also a fourth type of space insurance, which is a more unique and less time-defined one, known as launch plus life insurance. This functions as mix of launch and in-orbit insurance, providing coverage for both physical damages and malfunctions.
The First Hurdle
But now that we have the insurance process better defined, let’s discuss some of the problems that arise. The first big one comes from the nature of space launches and the risks they carry. Insurance companies are always going to be more hesitant to cover a risky asset. And so, following the same logic that leads to premiums on car insurance shooting up after any accident, as you are now a higher risk, the premiums for launches tend to start off rather high. The average for a satellite being sent into space seems to be between 15-25% of its total value. And given the sheer value of most satellites, these percentages imply quite the expensive insurance. As if that weren’t enough, there is another problem that’s been on the rise recently.
Another Complication
It’s no secret that launches have become more and more frequent in the past few years. And while that has led to more opportunities arising to venture into space for research, IoT, GPS services, and more, it has also led to demand for launch services exceeding the resources available. And while the most obvious resource impacted by this are the rockets, themselves, the demand for insurance on a mission has also made getting a good insurance package trickier.
While insurance is not a tangible, finite resource like rocket, it is also not infinite, per se. In fact, the number of companies that deal in space insurance is overall low. After all, insurance companies are not going to adopt strategies that don’t earn them a profit. And so, balancing the risk/cost ratio for them is paramount. And the less risk they have to take, the more likely they are to follow that path. Unfortunately, like we said before, when it comes to a high-risk endeavor like a space launch, the only way for insurers to ensure a profit is high premiums. And the more customers they have requesting this type of service, the more risky propositions they are taking on. In other words, the booming nature of the NewSpace sector has led to insurance for launches becoming even more complex to navigate than before.
Still, insuring a launch is crucial, meaning that finding the right package is a necessary hurdle to clear. So, what is the solution? Well, that’s where Impulso might be able to help.
Impulso’s Space Insurance Service
While we do not directly provide insurance for a mission, we do have a vast network of underwriters that we can rely on. This, combined with our team’s extensive experience in dealing with space insurance, enables us to give our clients the solution that best fits their needs. Not only that, we take care of all the minutia ourselves, making sure that every critical phase of a mission is covered. And while we can’t magically lower premiums, we can make sure that they are not higher than needed.
If you’d like to learn more about how we can help with this crucial aspect of a mission, check out our Insurance servicepage.
But with that, I leave you for the day. Hopefully, I was able to make this topic at least somewhat interesting to read. See you all next time.
