Space Insurers Aim For Increase

Space insurers will be seeking premium increases up to 30 percent after sustaining three rocket losses, according to a market review by insurance broker Aon.

In its latest report, “Aon Space Market Review 2007,” Aon said the increases follow two rocket failures in 2007–the Sea Launch rocket carrying the NSS-8 satellite and the Proton carrying JCSat 11 satellite.

There was also a third failure, the Proton rocket carrying the AMC-14 satellite. Aon said the failure resulted in “a pivotal time for both the insurance market and operators after several years of reducing premiums.”

The 2007 space insurance market, worth approximately $660 million in launch and in-orbit premium, saw the arrival of at least six new insurers, which led to abundant capacity and falling premiums.

The losses were aggravated by a December helium leak in the Rascom 1 satellite resulting in a reduced lifespan of the satellite and a potential claim of $256 million to its insurers.

Total claims for 2007 reached an estimated $835 million, prompting insurers to re-assess their premium rating and income targets for 2008.

“Competition will inevitably exert downward pressure on rates, but at present it's a battle of wills between insurers' perceived need to charge more in response to increased claims versus the laws of supply and demand,” said Peter Elson, senior managing director of Aon Space, in a statement.

He added, “Due to high capacity, competition will be rife on attractive business and where the sums insured are low. Conversely, for less proven technology or systems with reliability concerns–especially when combined with a need for high levels of insurance–the market will prove stickier in pursuing its price targets. We're therefore likely to see more differentiation in pricing not only between risks but also amongst insurers for any given risk.”