SatInsurance To Pump Up
Space insurers are targeting premium increases of up to 30 percent following losses in 2007, which included the failures of the Sea Launch rocket carrying the NSS-8 satellite, the Proton carrying JCSat 11, and the initial failure of the Proton rocket carrying the AMC-14 satellite.
This spells a pivotal time for the insurance market and operators after several years of reducing premiums, according to the latest Aon Space Market Review 2007. The 2007 space insurance market, worth approximately 660M/USD in launch and in-orbit premium, saw the arrival of several new insurers: Atrium in London, Asia Capital Re in Singapore, Axa Corporate Solutions in Paris, Elseco in Dubai, Glacier Re in Zurich and Korea Re in Seoul. This led to abundant capacity and falling premiums. The market was sent into a state of flux in December when, on top of the launch failures, the Rascom 1 satellite suffered a helium leak resulting in its journey to final orbit with a heavily reduced lifetime and a potential claim of 256M/USD to its insurers. In total, claims are estimated to reach 835M/USD for 2007, prompting insurers to re-assess their premium rating and income targets for 2008. Ultimately, insurers looking to win business need to persuade their management of the rationale behind offering competitive rates. While 2007 was an uncharacteristic year for space claims, when set against the more reliable experience and good market profitability of the previous five years, it was not inconsistent with longer-term industry trends. If insurers perceive 2007 and early 2008 as an indication of higher claims patterns to come, this could lead to tough negotiations over the coming months.
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