With two launches due to take place before the end of the year, the satellite insurance market is on course for another profitable year.
If the launches of SES-4 on an ILS Proton rocket and the six Globalstar satellites on an Arianespace Soyuz prove…
With two launches due to take place before the end of the year, the satellite insurance market is on course for another profitable year.
If the launches of SES-4 on an ILS Proton rocket and the six Globalstar satellites on an Arianespace Soyuz prove successful then total claims for the year will amount to approximately US$625m and overall income at between US$750m and US$800m.
While this is not as large as 2010’s profit of around US$511m (based on premiums totalling US$884m and claims of US$373m), it represents another good year for the majority of underwriters and will continue the downward pressure on both launch-plus-one and in-orbit insurance rates.
In addition, the overall capacity of the space insurance market is continuing to rise with two new underwriting operations understood to be joining the fray in 2012.
Depending on the type of satellite and launch provider, a typical launch-plus-one insurance rate is currently around 9% and in-orbit approximately 0.9%. There remains a slight differential in rates depending on whether the satellite is being launched on an Ariane 5 or a Proton, around 0.5 – 1%, following the latter’s failure earlier this year but with every successful subsequent Proton launch this disparity narrows.
A further factor in the downward pressure on rates is the emergence of non-traditional space insurance markets, particularly in China and Russia.
Satellite operators in those countries are increasingly looking to this domestic market to provide a portion of the cover. One space insurance source suggested that in recent times, these domestic underwrites are taking more sizable chunks of the placement, up from US$20m to closer to US$70m. They are also seemingly willing to provide coverage at lower rates than the international markets.
However, the claims payment track record of the non-traditional space insurance markets has yet to be properly tested so there remains a potential risk of recovery.