A year of significant losses in space insurance has convinced some insurers to keep their feet on the ground as others shoot for the stars.

Space is big business, and for good reason. From the GPS watch that tracks our morning jog, to anything we ever do on the internet, to the running of the farms that produce the food we eat, and even to managing our emergency services, so much of our lives rely on satellite technology.

Compared with the way they worked a decade or two ago, businesses that manufacture and manage those satellites are operating in a very different fashion.

They’re designing smaller and less expensive vehicles and releasing constellations of satellites, instead of one or two larger ones. They’re also banking on more advanced and accurate launch capabilities, particularly since Elon Musk’s SpaceX arrived in the market.

This all means the sector’s risk profile has changed dramatically. 

Chris Kunstadter, a four-decade space insurance veteran and founder and president of space risk and insurance consultancy Triton Space, says technology is driving much of the change.

“Around 2017, we had SpaceX coming into the market with its inexpensive but very capable launch vehicle,” he says. “That changed the way companies looked at deploying satellites.

“SpaceX reduced the cost of launch. At the same time, we started seeing many more small, inexpensive satellites creating a new paradigm of space activity.”

While insured values for past launches — such as a European Ariane 5 rocket, which could carry two large satellites insured by its owners — exceeded US$800 million, the highest-valued launch is currently about US$500 million. 

Typically, SpaceX’s Falcon 9 will only lift one large geostationary satellite (a high-altitude satellite that remains fixed over one longitude at the equator), but this capacity will change with the introduction of the Starship launch vehicle.

The sixth flight test of the latter spacecraft is targeted to launch as early as Monday 18 November.

“While a typical big, geostationary satellite can last 15 years or more, the coverages we write for big satellites are usually launch plus one year,” says Kunstadter. 

“For constellations of small satellites, we sometimes just write launch vehicle flight-only coverage.

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