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Risks in commercial space flight
© picture alliance / imageBROKER / John Pulsipher

Risks in commercial space flight

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    There are few areas in insurance where causes of property and liability losses are as varied, or the consequences of malfunctions and system crashes as far-reaching as in commercial space flight.

    Once a satellite moves into orbit, it’s too late for repairs

    US$ m
    The investment costs for a satellite and its launch vehicle amount to some 250-300 US$ m
    Satellites measure the earth, take the most breath-taking images of our planet, provide information for the weather and GPS, transmit TV and radio signals, and make telephone and internet communications possible even in remote areas.  And, satellites are becoming ever-more complex, sophisticated and expensive.  With only  20-25  launches  per year, the insurance industry is confronted here with a group of risks that would hardly be insurable by normal standards. Virtually all satellites are unique, and they have never been previously tested under real conditions. Even a small defect can result in a total loss.

    Risks for satellite operators: from day one, it’s high stakes and no redos

    © Neutronman / Getty Images
    Earth’s orbit is becoming crowded
    Geostationary orbit is used by commercial, military and weather satellites, and others. It is becoming crowded, especially above and between industrial centres.

    The deployment of a satellite is a high-risk venture for operators. Satellites are rarely “re-used”. Most satellite are one-offs – designed to exact specification. Operators start from scratch. These highly sensitive and complex pieces of technology are at risk of damage at every stage – on the ground, during production, transport and assembly. In orbit, even minor damage can lead to a total loss and to the failure of the entire project.

    Characteristics of a typical space risk portfolio

    • Technological diversity
    • Wide range of insured values coupled with high exposure to total losses
    • A possibility of total losses accumulating when several satellites are launched together on a single launcher
    • Risk of serial losses (partial or total) due to generic defects in a series of satellites

    Satellite applications are becoming increasingly complex, projects more technically and commercially demanding

    Modern television satellites: New formats push the demand for higher bandwidths

    © Mr. Murdoch / Getty Images
    Satellite networks

    Since the early 1960s, it has been possible to receive television signals directly via satellite. In the beginning, a transponder had a single analogue PAL transmitter, but today up to 10 digital channels can share the same transponder. The entertainments industry is making great advances and possible applications like high and ultra-high definition, 3D television and even in-flight satellite transmission all require steadily increasing TV capacity.

    Compared with telecommunications satellites, television satellites have a relatively high transmitting power. Modern television satellites can transmit several dozen programmes at the same time. This figure can be increased to a few hundred with the aid of digital technology. The number of programmes that may be received by a single antenna can be quadrupled if several satellites operate in the same orbital slot.

    Operators were originally concerned about having too much capacity if there were only digital transmissions.  Today, higher-resolution  formats require  more  bandwidths, which in turn  creates demand for new satellites with higher throughputs.

    Earth exploration satellites orbit the earth around 15 or 16 times a day

    Satellite value is climbing, as does the financial risk involved
    WorldView-4, launched in 2016, cost around 800m US-Dollars to build. In 2018, the satellite, with an insured value of 183m US Dollars, was lost to gyro failure. Its predecessor, GeoEye-1, cost some 209m US-Dollars.

    Earth imaging satellites provide the most beautiful and remarkable pictures of the earth, and are used for various applications, such as cartography, raw materials exploration, in agriculture and forestry, and also for climate research – earth exploration satellites are currently scanning the planet in incredible detail, and the high-resolution photos they produce have a huge influence on our everyday life here on earth.  Observing an individual event, say a flood, requires several earth  exploration  satellites because of the narrow observation window of just a few minutes.

    The demand for data and images is rising  fast,  and  technologies and possible applications for the satellites  grow  more diverse.  Earth exploration satellites  achieve ever-sharper images. Next-generation applications  building on  near-real time  data processing push  both operators and users  to expand the boundaries of  satellite technology.

    Key challenge: Insuring the seemingly uninsurable

    Given the uncertainty surrounding satellite projects, the task of calculating premiums commensurate with the risks is that much more difficult. Specialists must identify and assess all technical and financial risks – a process that takes time, not least because the complex technology draws on a diverse group of suppliers.

    Commercial satellites now make up more than half of all US satellites in orbit (March 2019)

    Solutions for commercial space flight and aviation direct business

    We develop customised risk transfer solutions to respond to complex demands and enable industry clients to realise their objectives. Our global approach is based on highly specialised expertise, backed by financial capacity and underwriting excellence.

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    Stephanie Deml
    Stephanie Deml
    Head of Aviation and Space Direct