To boldly go

With thousands more satellites, emerging commercial missions and growing systemic exposures, insurers are rethinking the way they underwrite one of the market’s most technically demanding classes. Martin Allen-Smith reports on the new possibilities

The commercial space sector is undergoing a transformation unlike anything seen since the dawn of the Space Age. Once dominated by governments and a relatively small number of satellite operators, orbit is now becoming an increasingly crowded commercial environment. Mega-constellations, private launch providers, satellite servicing missions and plans for commercial space stations are rapidly expanding the boundaries of the space economy.

For insurers, that growth presents significant opportunities – but also a fundamentally different risk landscape. Traditional underwriting approaches centred on a relatively small number of high-value satellite launches are evolving as insurers grapple with more diverse technologies, changing business models and an increasingly congested orbital environment. At the same time, reliance on satellite services has become deeply embedded in modern economies, raising the stakes should anything go wrong.

The result is a market that is adapting on multiple fronts: understanding new technologies, developing new underwriting approaches and working alongside governments and regulators to ensure that commercial growth remains insurable.

Perhaps the biggest change is the sheer scale and diversity of activity taking place in orbit. The market has moved a long way from the relatively predictable environment insurers were familiar with only a decade ago. Space insurance once revolved around 20 to 25 launch projects each year, typically valued between £111m and £296m.

“Over the next few years, with the introduction of the next generation of ‘mega lift’ launch vehicles, the aggregated values of the spacecraft that these rockets will carry will present further challenges for space insurers,” says Ian George, head of space at Lockton. “As more organisations enter the space economy, so the range of projects has greatly increased, making it increasingly hard to evaluate risks. Technology continues to evolve at pace in the sector, and reliability and heritage remain the key buzzwords and risk evaluation metrics for space insurers.”

Liz Evans, partner at Clyde & Co, believes the sector’s democratisation lies at the heart of this transformation: “The space sector is no longer the preserve of a small number of government agencies and major operators. Legal systems around the world have been adopting legislation to give private companies more rights in space. As a result, we’re seeing a much broader range of participants entering the market, from satellite start-ups to private launch providers, which brings innovation but also introduces new and less-tested risks.

“For insurers, one of the biggest challenges is understanding how these technologies will perform over time and how increasingly crowded orbital environments could affect loss frequency and severity.”

Space insurers are now preparing for commercial space stations, servicing spacecraft and lunar missions – developments that would have seemed highly specialised only a few years ago. At the same time, society’s dependence on satellite services has grown dramatically, extending well beyond telecommunications into financial systems, transport and critical national infrastructure.

Denis Bensoussan, head of space at Beazley, points out that recent conflicts demonstrate the reliance on satellite services and their vulnerability to GPS spoofing. “Across Europe and the Middle East, aircraft operators have had to fall back on traditional navigation methods when satellite signals became unreliable. Similar disruption could easily impact the precise timing services used by financial systems and international payment networks,” he explains. “Even everyday infrastructure, such as traffic lights, increasingly relies on satellite-enabled time synchronisation, creating the potential for significant disruption if signals are affected by error or malicious attack.”

Jared Ball, global practice leader of space at Aon, notes that significant portions of commercial activity remain uninsured. The largest low Earth orbit operators frequently self-insure their launches, he says, while new payload technologies are increasing technical complexity for those risks that do enter the insurance market. “With annual premium levels declining across the space insurance market, insurers need to expand their portfolios by covering emerging risks, such as commercial human spaceflight. However, a projected increase in more traditional GEO satellite launches over the next three years should help support premium income,” Ball explains.

Traditionally, space insurance has concentrated on launch and in-orbit risks for individual satellites. However, the rapid growth of satellite constellations is forcing carriers to think much more broadly about systemic exposure.

Clyde & Co’s Evans says this represents a fundamental shift in underwriting philosophy: “Underwriting is becoming much more dynamic. Historically, insurers assessed individual missions or satellites, but today’s environment requires a broader view of systemic risk. This is especially true in respect of low Earth orbit constellations where space situational awareness is challenging. Mega-constellations, cyber vulnerabilities and the growing volume of debris all have the potential to create losses that affect multiple assets at once.”

Bensoussan agrees that the increase in satellite numbers demands a broader perspective. “The number of satellites in orbit is rapidly increasing, with some projections suggesting the current count of 16,000 could stretch to 100,000 by the end of the decade. Huge constellations are creating congestion and raising the risk of space debris.

“This backdrop has led us to move beyond single-satellite risk and evaluate space through a more holistic and systemic lens. That, in turn, changes the way we underwrite. Space insurance is in the middle of a transition period where coverage and terms and conditions are being adjusted to meet new demands and requirements coming from a changing industry, but also to address new risk profiles. This evolution is necessary to maintain the relevance and sustainability of the space insurance market as an enabling partner and strong promoter of the space ecosystem.”

Unlike more mature insurance markets, space underwriting cannot rely on decades of claims experience and extensive actuarial datasets. Every mission is different, technologies continue to evolve rapidly and relatively few directly comparable losses exist.

Instead, insurers continue to depend heavily on specialist engineering expertise. Evans says space underwriting has always involved a degree of uncertainty, and that insurers rely heavily on technical expertise, engineering analysis and mission-specific assessments, rather than purely historical claims data. While the volume of available data is growing as the market matures, underwriting remains a highly specialist exercise that combines actuarial insight with detailed understanding of the technology and the individual mission profile.

In Bensoussan’s view, limited historical data is not an obstacle but a defining characteristic of specialty insurance. He says the market has always specialised in underwriting emerging risks where historical experience is scarce, pointing to the development of insurance products for commercial lunar activities as an example of how insurers are evolving alongside the industry rather than waiting for mature datasets to emerge.

There are other factors to consider in the line that demand the involvement of highly specialist underwriters, according to Aon’s Ball.

“Satellites built by the same manufacturer may also carry different communications payloads, which can significantly alter their risk profiles. As a result, insurers cannot rely solely on the manufacturer’s overall performance or rating when assessing a risk,” he notes.

Elevating guardrails

Alongside technological innovation, regulation is emerging as one of the defining issues for the future development of commercial space. While governments have generally sought to encourage private investment, regulation has not always kept pace with commercial activity.

Evans believes international cooperation will become increasingly important as orbital activity continues to expand: “A stable regulatory framework is essential for a healthy insurance market. Space is inherently international, so consistency between jurisdictions and cooperation on issues such as debris mitigation, traffic management and liability regimes will become increasingly important.

“While many countries have adopted new space law regulations, there continues to be a need for international enforcement. There has been significant progress, including the adoption by many space-faring nations of the Artemis Accords, but the original international treaty frameworks were developed for a very different era of space activity and may need to continue to evolve to keep pace with the scale and complexity of today’s commercial market.”

The picture is one of an industry in transition, with an insurance market undergoing significant evolution rather than wholesale disruption. Space insurers remain accustomed to assessing technically complex risks, but the commercialisation of orbit is changing both the scale and nature of those exposures.

As commercial activity accelerates and reliance on satellite-enabled services continues to deepen, insurers, brokers and legal specialists agree on one point: maintaining an insurable space economy will depend not only on innovation in underwriting, but also on continued advances in regulation, international cooperation and the sustainable management of Earth’s increasingly crowded orbital environment.

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