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Private Sector Space Flights Launch Demand for Coverage

Experts say that the increase in commercial spaceship launches has not brought stability to the space insurance market
August 23, 2012

During the third week in May, the first privately owned spaceship made contact with the International Space Station (ISS), a transforming event in the history of space flight. Experts say that the increase in commercial launches has not brought stability to the space insurance market. Jan Schmidt, head of space corporate solutions at Swiss Re Ltd. in Zurich, described the approximately 20 to 25 insured commercial space launches as relatively rare events. Schmidt said that each launch has a high insured value but the limited number of insured risks each year makes the space insurance market volatile.

After NASA concluded its space shuttle program, the federal agency signed a $1.6 billion contract with SpaceX for 12 launches to carry supplies to the ISS until 2016. SpaceX is licensed by the Federal Aviation Administration and is required to obtain third-party liability insurance. Schmidt said that such private launches provide the insurance industry with great opportunities. Chris Kunstadter, a senior vice president at XL Insurance, expressed confidence in NASA’s oversight of the SpaceX launches and noted that XL insured a small payload that was part of the recent flight. Kunstadter acknowledged the inherent risks of space flight and said that all parties needed to avoid complacency before the industry matures. According to Schmidt, the insurance premiums are proportional to the record of the company and the market has sufficient capacity so prices have been stable, a condition that could be changed by a single accident.

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