Satellite insurers expect record 2010
September 6, 2010
By Chris Forrester
At this week’s EuroConsult satellite business week in Paris, one group of delegates will be smiling. It seems the all-important satellite insurance industry is looking likely to have a record year for profitability. Insurance giant Willis Inspace on September 3 reported that insurance premiums for the year are likely to approach $600m, and while there’s still more than a few weeks of potential problems until the end of the year, to date there have been no claims!
While this naturally boosts profitability, there’s a second effect of the lack of claims: premiums will probably fall, and lower even than current rates, already the lowest for the past 10 years.
Premiums for most well-proven satellites and their launcher rockets tend to be about 10% of the total insured value. This sum covers the actual launch and tends to include the satellite’s first year of operation. Not all satellite operators bother with insurance. Intelsat, for some time has self-insured its satellites believing that its proven reliability of in-orbit operation means it makes better business sense to self-insure.
Last year, according to trade publication Space News, the insurance industry booked between $800m-$825m in premiums, and paid out just over $400m in claims or partial claims for losses. To date, about $400m has been paid in premiums – and importantly, no claims.
The fall in fees could drop to 7% of the insured sum, it has been suggested. The thinking is that with Ariane and Proton, the industry’s two ’work-horse’ rocket launchers are now delivering advanced reliability, and thus the satellite owners are looking for a discount.
That could even bring smiles to satellite operators.