Published by Insurance Day -
Benito Pagnanelli considers the early space risks and how the space market has developed.
It seems hard to believe now, given how sophisticated the space insurance sector has become, but the space insurance age only began in 1965 - nearly a decade after Sputnik 1 was launched - with the advent of commercial space flights. Private operators, funding what was then a relatively unknown risk, needed insurance to satisfy their backers. The first space risk was the pre-launch insurance for the Intelsat-1 - also known as Early Bird - and was placed primarily in the marine market.
In those days, pre-launch insurance typically included cover during construction, transit, storage and testing. But as satellite activity increased and space travel became a reality, attention turned to the possibility of insuring the launch phase - the phase of the process containing the highest risk of some form of failure.
Initially cover was largely only available for multilaunch insurance programmes, where the insurer covered the risk at a rate of 15% with a deductible of one or two initial total failures and cover was limited to total loss.
However, both the commercial space flight and space insurance markets became more sophisticated. As a result, not only did cover become available for individual launches but also partial losses, based on a specific formula, began to be covered. Early risks were mainly underwritten by specialist aviation insurers but in the mid-1970s space insurance specialists began to emerge both in the Lloyd's market and in the company sector where, most notably, Orion, Assicurazioni Generali, Munich Re and Swiss Re set up their own specialist entities. At the same time, industry bodies began to recognise this emerging market. In 1979, the International Union of Aviation Insurers formally took an interest in the space market, setting up the Space Risks Study Group.
By contrast, cover for inorbit risks - which begins when the launch policy expires and provides all-risk cover when the satellite is in its orbit - was much slowerto get off the ground, only becoming common practicein the mid-1980s.Download the original article in PDF format >>