Learning from 2014: Insuring launch risks
Tight budgets, time pressures and total losses: government space agencies need to rethink their position and are now considering seeking insurance cover against losses – which could offer huge potential for Munich Re as the market leader for space insurance.
High losses for ESA and NASA in 2014
Whereas in the past, government space programmes were allocated high budgets and were therefore able to absorb major losses, cost pressures are now rising and there are far fewer resources available. Major losses can destabilise ambitious government space projects and result in high costs for the general public. The commercial launch vehicles used are insured by the international space insurance market and by Munich Re, but the satellites in the government programmes have not been covered up to now. "Although scientific satellites are difficult to insure because of their prototype character and the high costs involved, we would be prepared at any point to cover solely the launch risk," explains Christian Riedl, head of the Space Department.
Space insurance: Three forms of cover
Space insurance is roughly divided into three forms of cover, reflecting the various phases involved, from preparation and launch to operation of the satellite in orbit. Munich Re therefore offers the following covers: pre-launch, launch, and in-orbit insurance.
Pre-launch insurance: Pre-launch insurance provides all-risks coverage for material damage in the pre-launch phase. In other words, while the satellite is being taken from the manufacturer to the launch site (the transportation itself is often covered under a separate marine policy), while it is being given its launch configuration and integrated into the launch vehicle, and while all the preparations are being made for the launch itself.
Launch insurance: Launch insurance covers the phase from the launch vehicle lifting off from the ground to the satellite separating from the launch vehicle and the insertion of the satellite into the "correct" orbit. It generally also covers the satellite's first year of operation. A partial loss is assumed if the satellite becomes only partially operational or if its service life is shortened. Once the impairment from a partial loss exceeds a certain threshold, we speak of a constructive total loss.
In-orbit insurance: In-orbit insurance offers protection against the risk of a satellite's complete or partial failure during the operating phase. As with launch insurance, the insured value is an agreed value, which is based on the replacement value at the start of the satellite's service life. The sum insured thus covers the total cost of manufacturing and launching a replacement satellite into orbit. In addition to the material damage insurances described, Munich Re offers an innovative launch plus life cover for a satellite service life of up to 15 years from the launch.