Insurance Barriers

Is it true that one of the major reasons private space start ups struggle so much is that insurance companies refuse to insure their projects/technologies? If so, what can be done to get around this problem? Thoughts? Comments?

The insurance aspects of space have several components:

1) In order to get a launch license you must prove to the FAA that you have the ability to pay for the Maximum Probable Loss (MPL) of your vehicle crashing. They calculate MPL for you using several factors: population density, expected vehicle reliability, thrust/flight termination, etc. The MPL for SpaceShipOne's flight was $10 million mainly because the actual rocket part of that flight happened over Edwards, not Mojave. If the rocket had actually flown from Mojave it would have higher.

2) Lack of flights for insurers to determine risk. Insurers operate on looking at the past history of some action and use that to determine the probability of a loss. In our case there is no real history so they have to assume every flight will fail and kill the Pope or an orphanage in the process.

3) Nearly all underwriters familiar with space have a comsat background. Therefore they do not know how to work with payloads that aren't a half a billion dollar satallite.

All of these are solvable problems through education and lots of flying. The MPL goes down as proven reliability goes up. You just have to figure out how to run at a loss or break even while you work to get the insurance down. There are also efforts at places like the Isle of Mann to create a captured insurance product for the industry.

Hope that helps!

-MM

Have you looked into the possibility of approaching LLoyds of London or a similar insurance exchange?

What are you actually insuring? That the rocket falls on someone's head or that the payload crashes?

If the launch would be over water with no soul in a few hundred km's, how can the insurance be so high? Besides, every rocket has a failsafe of some kind if something goes wrong. If you can prove reliability of that part, the worse thing that can happen is either lots of minor damage (except for the payload) or one instance of rather big damage. But i'm not into insurances, so i'm just talking.

I'm still interested to see what a launch license would cost in other countries. I doubt you need a damn FAA license if you launch from monaco or australia....

Just this moment I associated with the topic of this thread that ships are certified by particular companies like the Germanischer Lloyd. These companies check ships on a regular basis over the whole lifetime and starting when the ship is under design and construction yet.

Such a certification and regular inspection of reusable vehicle could reduce the risk covered by insurances and thus bring down the insurance costs as well as costs etc. of FAA linceces.

What about it?



Dipl.-Volkswirt (bdvb) Augustin (Political Economist)

The insurance probably covers both loss of payload and the possibility of the rocket crashing into a populated area.

The loss estimation is done by the probability of the rocket or debris falling into a populated area and the damage that might do.

You can have a "fail safe" that detonates a rocket, but remember that even so, you will have debris moving at hundreds of miles an hour raining down over a wide area.

Boeing operates a sea-based launch platform that would probably be pretty competitive in terms of insuring flights. If the flight was intialized in the middle of the pacific, the population density considered would be virtually nil. This platform also has the unique feature of being mobile, so that you can launch payloads from the equator where it is cheaper. The earths rotational speed at the equator is fastest, and this essentially gives a "boost" to anything that is launched into orbit, allowing either greater payloads or higher orbits than the same vehicle launched farther north/south of the equator.

For this reason, one should consider the location of any space port in calculating the cost to orbit. Sweden is attempting to build a spaceport, and although a noble idea, Sweden is essentially in the arctic circle and will have to compete with sites much closer to the equator. I doubt it will be successful for that reason.

Bear in mind that the US launch sites that NASA uses are both very far South in the continental US for a reason. (Texas and Florida)

I am not involved in the part of the insurance industry that evaluates riskiness. My function is primarily that of determining financial health. I see the end results of financial years in terms of how much money was made or lost.

I would defer to Mr. Mealing on this one, as he is the one who has actually dealt with the process of getting coverage.

I think it is safe to assume that as the technology develops and matures, risk will go down, taking the costs of insurance with it.

Actually there are no launch sites in Texas. There is Vandenberg in California, for launching to the south into polar orbit, but nothing in Texas.

That's right. Nasa maintains a command center in Houston, that is what I was thinking of.