An insurance company can take care of cover on hundreds if not thousands of homes or vehicles, or just a rocket launch or two. With the value of a large satellite, plus its launch costs, plus its post-separation first year in orbit – which mostly covers the majority of likely problems – topping $250 million, it potentially represents a huge business.
Indeed, insurance giant Swiss Re Corporate Solutions (SCOR) is blunt and as analysed by Space Intel Report (SIR) says the satellite underwriting market has grown worse over the past couple of years, and will further deteriorate unless some companies quit the business.
In essence, premiums are too low as insurance companies fight for a share of a dwindling number of valuable satellites which has resulted in a glut of underwriters in what is a buyer’s market for insurance cover.
SIR states that premiums continue to fall. As an example, it quotes that the industry’s largest-ever risk is a giant Ariane 5 rocket with two important geo-stationary rockets on board. That’s an expensive risk but annual premiums across the whole sector in 2018 were less than $500 million, which is not sufficient to insure such a launch.