PARIS — A space insurance executive confirmed Sept. 11 that a spate of recent claims is increasing rates and leading some insurers to reconsider their place in the market.
In a presentation at Euroconsult’s World Satellite Business Week here, Dominique Rora, senior space underwriter at AXA XL, said the underlying problem was not the claims themselves but rather declining premiums that cased back-to-back losses for the industry in 2018 and 2019.
“In recent months there have been a number of claims, and the amount is quite high. It is high, but not out of the norm,” he said. “What has been of particular importance over the past few years is the decreasing trend in premium.”
Those claims include the July launch failure of a Vega rocket carrying the United Arab Emirates’ Falcon Eye-1 imaging satellites, which at $415 million is the largest single claim to date. Maxar Technologies’ WorldView-4 imaging satellite failed in orbit in January, resulting in a $183 million claim that the company said in May would be fully paid out by insurers.
Those losses appear to have put an end to a long trend of declining rates. Rora noted that, in 2003, rates for launch put the first year of operations of satellites exceeded 20%, but by 2018 similar coverage had dropped to 5%. That was driven by an increasing amount of capacity in the space insurance market.
“In the first part of 2019 there was a flattening of rates, and since the events of this summer we have seen an increase,” he said, but didn’t quantify the increase. “We don’t know yet where the rates will stabilize.”
Part of that uncertainty is linked to potential departures from the market by insurers. Swiss Re announced at the end of July it was exiting the space market, citing “bad results of recent years and unsustainable premium rates.”
Rora suggested others could follow suit. “There is a number of insurance players that are reviewing their position or withdrawing from this space insurance market,” he said, citing unnamed companies “performing a strategic review to decide what sort of strategy they want to have going forward, what sort of premium levels they want to see.”
“There is a general market consensus that the premium volume that we’re seeing today is about half of what it should be,” he said. Total premiums in recent years have been about $450 million per year, versus $700 million to $1 billion seen early in the decade.
Rora said that while rate are increasing, he did not expect a return to the high rates of the early 2000s. “Even if there is a sharp increase today, the levels we will see are similar to those around 2009 and 2010,” he said, when launch plus one-year insurance rates were about 10%.