Space Insurance: Who Bears the Risk in the New Space Economy?

Introduction: The High-Risk Frontier

Space is no longer reserved for governments. Commercial operators now own more satellites than sovereign states. Launch rates have quadrupled in the past decade. Mega-constellations like Starlink and OneWeb plan tens of thousands of satellites in Low Earth Orbit (LEO).

But with new opportunity comes new exposure.

• A single launch failure can cost hundreds of millions.

• Orbital collisions can wipe out valuable assets—or create cascading debris fields.

• Regulatory uncertainty leaves operators in legal limbo.

Enter space insurance—an industry rapidly reinventing itself to keep up with the risks of the new space economy.

What Space Insurance Covers

Space insurance is typically broken down into several categories:

1. Pre-Launch Insurance

• Covers physical loss or damage before liftoff.

• Includes transport, integration, and testing.

2. Launch Insurance

• Covers failure during launch phase.

• Most policies run until satellite separation is confirmed.

3. In-Orbit Insurance

• Covers operational risks in space, including:

  • System failure

  • Collisions

  • Power issues

  • Loss of control or data

4. Third-Party Liability

• Covers damage caused by space assets to other satellites or Earth-based infrastructure.

• Mandated by many national space regulators.

Why Risk is Increasing

1. Crowded Orbits

• LEO is becoming congested with mega-constellations.

• Risk of collision is rising exponentially.

2. Launch Volumes

• 2023 saw over 180 orbital launches; 2024 and beyond will break records.

• Higher launch cadence = higher statistical risk.

3. Complex Systems

• Satellites now carry AI, solar sails, propulsion, and sensitive instruments.

• More complexity means more points of failure.

4. Debris Proliferation

• Even “dead” satellites or spent boosters can pose collision risks.

• Kessler Syndrome—runaway debris cascades—is now a real insurance scenario.

5. Regulatory Ambiguity

• No binding global treaty on orbital liability or fault allocation in multi-party collisions.

Market Snapshot

• Global space insurance market: ~$600 million in premiums annually.

• Top insurers: AXA XL, Munich Re, Swiss Re, Hiscox, Global Aerospace.

• Premiums: 5–20% of satellite/project value depending on risk profile.

• Claims: Historically low frequency, but high severity.

Insurers’ Response to Mega-Constellations

Mega-constellations (e.g. Starlink, Kuiper) are changing the actuarial model:

• Thousands of small satellites with short lifespans mean high volume, low individual value.

• Traditional satellite-by-satellite policies are unworkable.

Insurers are experimenting with:

• “Fleet policies”: Cover entire constellations with pooled risk.

• Usage-based pricing: Per satellite-day or per TB of data.

• Conditional liability exclusions: Operators must prove they followed collision avoidance procedures.

Challenges for the Insurance Sector

1. Lack of Data

   • Few historical claims mean poor statistical modelling.

   • AI and machine learning being introduced to fill gaps.

2. Undefined Legal Norms

   • Who is at fault in a collision?

   • What happens if an inactive satellite is hit?

3. Dependency on External Tracking

   • Space Situational Awareness (SSA) data varies in quality.

   • Insurers depend on national agencies (US Space Force, ESA) for object tracking.

4. Reinsurance Limitations

   • Capacity may not scale fast enough to meet demand.

   • A single large loss (e.g. debris incident) could affect global premiums.

Opportunities for Operators and Boards

• Premium Optimisation: Operators with proven SSA, deorbit systems, and best practices may secure lower premiums.

• Resilience as Differentiator: Insurable, compliant operators will be preferred in tendering for government and enterprise contracts.

• New Offerings: Telecom firms may enter “insurance-adjacent” markets, e.g. SSA data-as-a-service, collision avoidance alerts.

• Risk Pools: Industry-wide cooperatives could emerge for shared self-insurance, especially in emerging markets.

Policy and Regional Developments

United States

• FAA mandates third-party liability insurance for commercial launches.

• NASA and DoD self-insure their assets.

• Debate growing around mandatory in-orbit insurance for commercial operators.

Europe

• ESA promoting insurance integration with mission planning.

• National regulators vary—France and UK have stricter third-party requirements.

• EU considering regional risk-sharing mechanisms for small operators.

Middle East

• UAE Space Agency exploring mandatory insurance for future national launches.

• Regional insurers may partner with international reinsurance to build capacity.

• Government space programmes increasingly require telecom vendors to carry liability coverage.

Strategic Questions for Boards

• Are our satellites, launch partners, and vendors properly insured across all mission phases?

• Are we compliant with the third-party liability laws of every country involved in launch, operation, or partnership?

• Have we modelled how an in-orbit collision could affect our business continuity?

• Can we leverage our operational excellence to negotiate better terms or become part of a regional insurance pool?

Conclusion

The space economy is growing rapidly—but so is the risk. From launch explosions to orbital debris, every new mission raises the stakes. Insurance is no longer just a financial product; it’s a strategic enabler of commercial access to orbit.

Telecom operators, space infrastructure providers, and governments must integrate insurance planning into every mission phase—from design to deorbit. In the high-risk, high-reward game of space, those who manage risk best will lead.