Satellite insurance

Satellite insurance which was formed as a specialist branch of aviation insurance is being underwritten by veyy few insurers in world. It was during the period of 1965 the first satellite insurance project placed with Lloyds of London to cover physical damages on Pre-launch for the Satellite called “Early Bird” (Officially Intelsat I).Following that, in 1968 cover was arranged to provide Pre-launch and extended to cover perils associated with Satellite launch to another project of Early Bird, the Intelsat III. Satellites in other hand are very complex types of machineries which are being manufactured and used by few larger companies (mainly Government entities) in the world. The projects associated satellites are funded in excess of billions of dollars and could run even 5–10 years include planning, manufacturing and testing up to the launch.

Types Of Cover

When consider on Insurance of Satellite, this class is mainly divided into two sections, although the latter sometimes available as an extension on former part. Those two sections are, I. Satellite Cover II. Ground Risk Cover

atellite Risk

There are four basic types of coverage available on Satellite risk section. Pre Launch, which basically provide cover for loss or damage to satellite or it’s components from the time they leaves the manufacturers premises, during the transit to the launch site, through testing, fuelling and integration with the launcher up until the time the launcher’s rocket engines are ignited for the purpose of the actual launch. Launch, the policy will provide cover only for the period from Intentional ignition until the satellite separate from the final stage of the launch vehicle, or it may continue until completion of the testing phase in orbit. Typical coverage usually runs for a period of twelve months but is limited to 45–60 days in respect of testing phase in Orbit. In Orbit, Cover provide for physical loss, damage or even failure of the Subject satellite while or during operation of Orbit placement. In addition to product failure other main elements of risk attached to satellites at Orbit are damages cause from objects in hostile space environment, extreme temperature and Radiation. Because it is not possible to repair a satellite physically placed at the Orbit, the cover basically grant as a product guarantee. Third Party Liability, the final section is mostly arranged because of statutory requirements of the Government of land where the launch take place. This Is irrespective of the nationality of the satellite owner and a special license must provide to regulated authorities before such launch takes place. Cover usually runs up to 90 days following the actual launch. In addition to above Loss of Revenue cover also available but not purchase often.

Ground Risk

Technically ground stations are uncomplicated. As many are run by large government entities such as NASA, the failure on the part of insured is much rare. In case where failure occurs due to events which are beyond the control of the Insured (i.e. Earthquake), cover will provide for cost of hiring premises, replace computer systems, software backup ect. Many disaster recovery plans are provided on Safety Manuals and instruction given on how to react in such situations.

Underwriting Considerations

When consider on rating structure of satellite insurance coverage, during early days many insurers base their rating according to the launch vehicle. An example would be where a launch vehicle being use which has one in ten failure rate, attracted a rate of ten per cent of gross. But with most modern computer systems many insurers in present rely on statistics even though such data are very much limited! Another important aspect of satellite insurance is the procedures attached to salvage. Though it is clearly impossible to obtain such in event of an Actual Total Loss or Constructive Total loss, many insurers rely on sharing such revenue with insured which may be obtainable from the failure portion of the satellite.

Regulation

Rules of satellite launch technology is governed by International Traffic in Arms Regulation (ITAR).The regulation clearly states that details of such technology which provides to insurance underwriters are subject to strict rules and are provided to selected insurers only. This is very important aspect as the structure and technology use on launch vehicle is very similar to missile technology. Therefore failure to comply with ITAR rules could result heavy fines and imprisonment. In case where Re insurance cover arranged, Re insurers who provide such cover has to rely on very limited information.

ources

* CII Study Book: Aviation Insurance