Insuring satellites is an expensive business. A satellite might cost $300 million -$400 million to build. Add in the actual cost of the rocket’s launch, and insurance to cover the first 30 or 180 days of operations, plus the insurance for the actual cost of the insurance, and you can see why premiums are measured in the tens of millions of dollars.

There are usually about 50 insured launches each year generating around $750 million – $1 billion in premiums depending on the launch schedules. But 2015 is proving to be a nightmare, especially given that 2013 was a ‘negative’ year when claims outweighed premiums, and last year when profits were not sufficient to make up 2013’s losses.

Currently this year, according to data from Chris Kunstadter/XL Catlin, is already seeing claims far outweigh premiums. “The nature of this business is very volatile,” said Chris Kunstadter, SVP and global underwriting manager for space at XL Catlin. “You don’t have many losses, but when you do, they’re large.”

The loss in May of a Mexican satellite cost insurers a massive $390 million. That’s expensive, especially when premiums have come down to around 6-7 percent of the amount covered helped by ever-more reliable rockets and satellites.

Worse, perhaps is that insurance rates cannot rise. Because cover is agreed at the start of the satellite’s build programme, and a build might take 3 or more years, then it will not be until new contracts are written that rates will rise.

Categories: Articles, DTH/Satellite