Widespread panic due to solar flares and satellite collisions isno longer the stuff of science-fiction now that these risks havethe potential to create prolonged business interruption andbillions in insured losses.

What goes on in the sky can affect those on the ground, says aGuy Carpenter report on the reinsurance industry's emergingexposures, and can disrupt entire communities and halt economicactivity. With more satellites than ever in orbit, our reliance onthem for global communications, broadcasting, air traffic controland weather forecasting makes the world a vulnerable place shouldanything disrupt their service.

“Space debris poses a serious risk to operational satellites,”says the report. “Indeed, debris amounts are increasing as objectscontinue to collide with one another, producing morefragments.”

According to the U.S. Strategic Command's Space SurveillanceNetwork, there are more than 20,000 objects greater than fourinches in size orbiting Earth. Of these, only 1,000 are activesatellites; the rest are abandoned rocket stages and pieces ofsatellites and fragments.

Tens of millions of smaller particles are currently orbiting atsufficient velocity to cause significant damage to operationalsatellites—which is what happened to Ecuadorian satellite Pegaso inMay 2013 when it hit debris left by a Soviet rocket; to Russianresearch satellite BLITS in January 2013 when it collided withspace debris; and to a U.S. commercial satellite in February2009.

Two orbits hold particular risk to hosting sites of collision:the lower earth orbit (LEO) less than 1,243 miles from earth thathouses space stations, government communications and earthobservation satellites, and the geosynchronous orbit (GEO) morethan 22,369 miles from earth that contains communications,broadcast and meteorological satellites.

“Despite end-of-life deorbiting strategies that now exist forthe latest generation of satellites deployed in the LEO thatinvolved a controlled re-entry into the Earth's atmosphere, nosustained debris mitigation measures are in place to catch existingspace junk and pull it out of orbit,” says the report, citing thatcatastrophic collisions will occur in the LEO at least every fiveto nine years over the next two centuries.

Swiss Re puts the total value of insured satellites in the LEOat around $1 billion, but expects it to increase as more privatecompanies explore satellite imagery and mapping.

The majority of insured satellites are in the GEO because of thecommercial communication, broadcasting and meteorologicalsatellites deployed here, sharing space with 500 obsoletesatellites, 200 rocket bodies and thousands of smallerfragments.

Perhaps the greatest space risk comes from the sun, whosetemperamental conditions can affect the performance of technologyon Earth.

Solar disturbances can flow through expensive conductivestructures on the ground, disrupting electricity supply, causingsatellite damage and triggering GPS signal disturbances to the tuneof “billions or even trillions of dollars of losses.”

Lloyd's of London estimates that a large solar disturbance couldcut power to up to 40 million people along the Eastern U.S.seaboard with an economic cost of up to $2 trillion and losses ofup to $30 billion for satellite operators.

According to Guy Carpenter, reinsurance options are available tocover risks during launch and orbit, as well as third-partyliability for damage caused by the satellite or launch vehicle orfor in-orbit collisions.

“While the cost of insuring a satellite during launch hastraditionally been higher than its life in orbit, this is likely tochange as underwriters become increasingly aware of increasedcollision risks,” says Guy Carpenter.

The best bet for interstellar risk-takers is to improvetechnical infrastructure, design early-warning systems forsatellite collisions and solar flares and create improved spaceweather forecasts to soften the blow of whatever happens up therebefore its impact is felt on Earth.