Space Insurance

S.I plays fundamental role in development & success of space activities. Insurable interests in space activities arise from number of different sources that creates risk of financial loss. These includes: Consequences of physical damage to satellites, Space vehicles, ground property & losses to property and services related to commercial space endeavours & third party liability.

International Space law & National regulations: I.S.L. does not impose launch provider with obligation of insuring launch vehicles. However this does not preclude States from regulating space insurance or from obliging their nationals to get insurance before engaging in space activities. Several states have adopted specific risk management & insurance obligations e.g. U.S, Russia, Australia , France, Argentina. In India since no demarcation between private & public interests and further no Space legistation generally covered under Commercial insurance.

Generally two types of space insurances: Space vehicle Insurance Satellite Insurance Other insurance possibilities available to satellite companies: Financial loss Business Interruption

SPACE VEHICLE INSURANCE

The space launch provider, usually the manufacturer itself elects to insure the risk associated with the: Construction Testing Transportation of launch vehicle to launch site Since Expendable launch vehicles can only be used for a single mission, there are no policies insuring the entire life of these vehicles. However carrier may obtain policy to insure life of vehicle stags while they operate before their fuel is exhausted & they are consequently discarded as projected. Thus launch provider could insure each of these three stages against any damage caused during its planned life

SATELLITE INSURANCE

 Satellite operators first time resorted to insurance in 1965. The first policy covered only third party liability & damages to satellite during pre- launch phase. The insurance was placed with Lloyds of London to cover physical damages on pre-launch for the "Early Bird" satellite Intelsat I. In early 1980S , the commercial satellite industry began to resort to insurance as main risk management tool. In mid 1980s space insurance industry suffered number of serious losses due to launch failures. Consequently space insurance market collapsed.

 In 1990s insurance market regained confidence. Rates gradually decreased due to increasing competition between insurers & then they stabilized. However , it continued react immediately to launch failures. Since space insurance market is closely connected to aviation liability market, fluctuations in the aviation insurance sector also affect space insurance capacity

The possibility of insurance a satellite & its rate depends on 2 major variables: Risk associated with satellite It is calculated after careful risk management evaluation Capacity available in space insurance market It depends on both history of satellite insurance claims paid, and the impact of outside factors on the confidence of industry. Change in S.I. market immediately affect the terms & conditions of the contracts. They modify exclusions, coverage period, premiums among other clauses.

Classification of Satellite Insurance

Satellite insurance generally encompasses: Satellite Liability insurance-It is strongly conditioned by the international & domestic outer space liability regulations Satellite Property insurance- It is related to the damages which the satellite may suffer during different stages i.e. i) Pre launch insurance ii) Launch insurance iii) Satellite life insurance

A.) SATELLITE LIABILITY INSURANCE

It includes coverage against liability for damages caused to third parties during the launch & in- orbit operations of the satellite. Compared to property insurance, liability premiums are fairly lower. The common notion among space powers is that the likelihood of third party damages is remote due to excellent safety record of launch companies.

B.) SATELLITE PROPERTY INSURANCE

PRE LAUNCH INSURANCEThis section generally covers: i) Satellite transit- It covers transportation of the satellite from the manufacturers premises to the storage facilities. ii) Satellite storage- The satellite usually undergoes launching tests & specific clauses provide for coverage of the satellite while it is stored during these tests. iii) Pre-ignition stage- It is generally defined as the period which begins with the commencement of operations to prepare the spacecraft for the launching vehicle. This policy may also cover the placement of satellite on the launch vehicle.

LAUNCH INSURANCEThis phase presents the most risks, as nearly 10% of all launches fail. It covers any damage & malfunctioning which may arise during launching phase. In most agreements, where the pre-launch ends from there launch phase begins, which is generally ignition of the engines.

 In most agreements, this phase extends up to moment when satellite reaches the intended orbit. So, for successful launch to take place satellite needs not only to reach GEO, but also to be placed in slot assigned by its respective national telecommunication authority according to distribution & frequency allotted by the ITU (International telecommunication union)

SATELLITE LIFE INSURANCE This provides coverage for most part of satellite life, which generally begins when it is ready to commence commercial service. This this section of policy begins with final condition of previous phase or upon satellites achievement of its designated orbit & continues upto agreed period of time. Earlier this period was 3 yrs but in todays satellite market its reduced to 1 yr & requires certification that satellite suffered no damage before beginning of insurance period.

Conclusion

 Space industry necessitates an insurance market which provides wide coverage at more competitive rates. The increasing participation of private sector in outer space activities , coupled with technology advances, will continue to foster the attraction of capital to space insurance market. In this line, in addition to being fundamental risk management tool, space insurance also constitutes a valuable element of financing.