With the recent successful publicity of California-based space transport company SpaceX, the commercial launch industry continues to steal the spotlight as a market of promising growth. No longer dominated by Proton and Ariane—the two launch vehicles traditionally used in space exploration and geocommunication—new vehicles from private companies like SpaceX are starting to enter a market with new groups and governments eager to see a bit of the skies.
All of that increased demand and new product offerings mean amplified insurance complications. Sima Adhya, Head of Space with Torus, told Insurance Business coverage like “launch plus one”—which covers the insured from the point of ignition—is a bit underpriced.
“The space market has been fairly profitable over the last decade, but unfortunately, rates are very competitive right now,” Adhya said. “We’re being asked by brokers to insure things that previously, we would have been able to have exclusions for. There’s a lot of rate pressure right now.”
The low coverage prices are the result of rapid technological development, an influx of manufacturers into the space and insurers eager to cover those vehicles. In the last few years alone, Adhya has seen two to three new market entrants in the space insurance market.
SpaceX is a large driver of this new market expansion. Adhya says many global insurers are eager to write coverage for SpaceX vehicles given their successful launch history—SpaceX’s Falcon model recently completed its eighth consecutive successful launch—and innovation.
However, without the actual heritage, Adhya is somewhat more hesitant on SpaceX’s influence on the market.
“Though we do support SpaceX and believe they are proving themselves, we are cautious,” she said. “The market does need to respond to new technologies and whilst it has been profitable for several years, how many of the coming years will be profitable is the question.”
Adhya sees more commercial satellites and rockets not too far down the line, particularly from the Chinese and Japanese markets. Smaller operations, including those launching geocommunication satellites, also present an opportunity for the insurance industry.
However, the question of heritage and reliable manufacturers is one insurance players cannot afford to ignore.
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