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Insurance… In Space

In which we take the long view to coverage

Maybe it’s because Thierry Colliot is French that he can reach easily for the lyrical. To the director of SpaceCo, a satellite can be like “a newborn baby, acquiring every day something new.” The company often deals with telecom satellites in geostationary orbit 36,000 kilometres above the Earth, but what if one of his babies stumbles into another toddler? After all, it can get crowded up there.

Colliot isn’t phased. “You’re right, it seems crowded, it seems like a lot of jam and debris, but in fact, first of all, it’s studied by the engineers what is the best way to achieve the final destination without collision. And all the debris is monitored. Monitored by several entities… And so normally the trajectory from separation to the final destination should be safe.”

As the head of Allianz’s space insurance subsidiary, Colliot has had his own opportunities to get a front-row seat for launches, sometimes closer than perhaps anyone would like. One client invited him to one at the Xichang satellite launch centre in China, where after the long journey from Paris, he was in mountainous country and passing farmers with “feet in water, working on rice, and a couple of minutes after, you just have a launch pad with a rocket… You are not attending the launch in a big building as usual in Cape Canaveral, where everything is usually, I would say, very structured with edifices, with buildings… Here you just cross a very small village with people around, horses and cows, and you go on two or three platforms where you have plenty of VIPs, military, governmental people. But it’s only a roof with a TV screen, and, I don’t know, maybe two kilometres [away] you can have the rocket.”

You have to wonder if two kilometres is a safe distance. Colliot strikes a diplomatic note. “This is difficult for me to answer, I don’t want to blame anyone.” But when pressed, he concedes, “What I can say, for a crew or for Cape Canaveral, the distance between the launch pad and the spectators is really more important than in China.”

You might really want to step back, given that the biggest risk for a launch is naturally an explosion, and “usually you can see it. Even more when it’s at the launch pad, you know, just at the lift-off, or maybe eight seconds after lift-off, or whatever. So then it blows up. We had a couple of explosions like this, very impressive, on the launch pad.”

If the right rocket burns don’t happen, “and you’re missing altitude, to reach a final orbit will cost a lot of fuel energy on board of the spacecraft to reach by itself the final destination.” He says with the right modeling you can assess the reliability of each rocket launcher, “depending on the mission, depending on the satellite, the weight of the satellite.”

Jason Hutchings, Aon’s Eastern Canadian practice leader for aviation, says people would be surprised at how far down in the economy space-related business goes. “I was approached by a company that made prisms. And they made prisms for a variety of applications. But they had been approached by one of the larger contractors in the United States, who were actually a manufacturer of satellites.”

Hutchings says “the basic situation is that you cannot rely on a CGL policy to provide coverage for aviation product liability, aerospace product liability, aviation premises liability, or really anything to do with the aviation, aeronautical, or space world. It simply doesn’t respond. However, the aviation industry has multiple products that are designed to do exactly that. So it’s not that they’re not insurable, it’s just that you need to approach specialty markets, and the aviation market is one of them.”

The number of players that build things to go into space, he says, is a substantial list, and the companies typically buy an aviation general liability policy, one that will allow you onto the launch site plus has coverage for third party bodily injury or property damage. He notes “obviously there’s a concern if you put something up there that it’s going to come down,” and then he brings up Skylab.

Prisoners of Gravity

For those too young to remember, Skylab was exactly what it sounds like, America’s first space station, floating above us all back in the dark days of the 1970s when people wore corduroy and listened to Fleetwood Mac. As Hutchings points out, there was a lot of panic, “the thought that this thing is going to come down and slam into somebody’s house, and there were lots of people that went out and tried to buy insurance in case this thing slammed into their facility or something.” Editorial cartoonist Roy Peterson even drew a brilliant sketch of hapless Joe Clark, prime minister at the time, under the shadow of a descending Skylab.

“There’s a lot of stuff that’s been up there for a very long time and doesn’t appear to be coming in, and a lot of things will burn up before they actually cause any significant damage. And I think people get a bit concerned when they think of things reentering, and certainly the International Space Station is a very large structure.”

But let us remember that Skylab harmlessly burned up in re-entry, with chunks of its debris landing in Western Australia. And most satellites, as Hutchings points out, can be the size of a stove or dishwasher, while “some of them are actually the size of a microwave oven.”

Policies can extend to your satellite dropping out of the sky, but he says “there are ways they can crash into each other—crashing into each other is definitely something that’s contemplated.” One has to wonder then if that’s becoming more frequent.

“There’s a lot of space up there, too,” replies Hutchings.

Chris Kundstadter, who manages the space insurance business for XL, says his company has worked very closely with companies on failure investigations to give insight into what can go wrong. “Sometimes it’s a workmanship error, sometimes it’s a design error… The thing about workmanship and design issues, both, is that they can slip through several times before they actually fail. There may be enough robustness in the system, such that there could have been that same workmanship problem on an earlier flight that didn’t cause a failure because of the robustness of the system. Then it slips in. Or it could be something that just happened on that particular mission.”

Mars Roving

And the distance between the supercool of space and its potential for humiliation has grown shorter lately. October saw the spectacular explosion of the Antares rocket, which was supposed to bring up some 5,000 pounds worth of groceries, gear and experiments for the International Space Station—one NASA contractor was quick to blame the Sovietera engines used. Soon after that came the crash of Virgin Galactic’s SpaceShipTwo test rocket, killing one pilot and making everyone question space tourism again.

Yet only days later, Mankind achieved the phenomenally impressive stunt of plopping the Philae lander on a comet. And if that wasn’t enough to send geeks into heaven (emotionally), NASA had its successful test in December of the Orion deep space capsule, which is supposed to take astronauts to Mars in the 2030s.

Yet all of that headline-grabbing stuff is really uninsurable. If the plucky little Rosetta probe—the one that carried Philae—had gone wandering off and had made the mission a failure, Thierry Colliot says you can’t really model for that kind of risk. After all, you start with considering your expected loss, and the probability of failure could reach close to 90 percent. “So this is not economical at all to make it.” Certainly not when the loss could be more than trillions of dollars. “To not reach and not land on the comet—it was really a very, very difficult mission. So in my knowledge, and I’m pretty sure of it, the spacecraft itself has not been covered at all.”

Kunstadter agrees and says such big jobs done for NASA or the European Space Agency are designed over the years with intense scrutiny and oversight. They tend to be one-off projects with no chance of re-launch.

“They would much rather have a mission that works. So they tend not to insure for that reason, but there’s also another reason they don’t insure, and that is, typically, it’s not within their budget to be able to buy insurance.”

Consider, he points out, the case of the New Horizons satellite launched in 2006. If all goes well, it should reach Pluto this year. “That’s a nine-year flight just to get there.” After three years of building it. If the insurance payout was to be used to build a replacement, that’s another three years and then another nine, and you might as well spend the money on something new.

Which is not to say there isn’t coverage along the way. “If NASA buys a satellite from a contractor, they may put some performance requirements on the contractor and say, if you—the contractor—are able to deliver us a satellite that works for a whole year, or three years, we will pay you extra. Now, the satellite manufacturer can turn around and insure that, and often does. We actually specialize in that type of insurance, because we have some unique relationships on those types of programs.”

If the space insurance world for now is mostly about the P in P &C, the time will inevitably come when it’ll be more about casualty. Astronauts are trained, but future tourists will be nothing more than passengers, subject to panic attacks, getting sick in zero g and other possible health problems. Stay in space for a long period, you lose bone density; the actual shape of your eyeballs can change. Seriously.

But Hutchings says the same argument over risks in space can be made about skydiving, and that while space is exotic, “really what we’re talking about is third party bodily injury or property damage. Fine, people get sick—so we bring you down, and are you still sick? If the answer is no, then okay, fine, life goes on. If the answer is yes, fine, we’ll deal with it.” He says the damages would still have to be quantified at some point. “You get onboard an airplane, there’s an air sickness bag in front of you.”

Chris Kunstadter is quick to remind skeptics that human beings have been flying around space for close to 60 years. “We have a tremendous amount of experience in what happens to the body and what the effects are. So I think that’s well understood, and certainly anybody who goes up on what we’ll call a space tourism mission has gone through some rigorous training and checked out to make sure that they’re fit and able to survive the environment. So I think it’s completely feasible.”

Ask Kunstadter if he ever thought he’d live to see the day a manned mission to Mars was in the planning stages, and he mentions how as a kid he used to read books by Willy Ley. Ley, a German scientist who fled the Nazis in the 1930s to eventually move to America, wrote popular articles for the sci-fi pulps and turned at least two generations on to space travel with books like Mars and Beyond and Adventure in Space.

“Those books, with the fantasy spaceships sitting on the moon, and that sort of thing,” says Kunstadter. “In my dreams I kind of did hope it would happen, and I’m glad that people are thinking in that way. I think people need to explore, people need to learn, people need to expand their horizons, and I think that space exploration is an excellent way to do that. I really do.”



Oh, inanimate carbon rod, where are you when we need you? But while “in rod we trust” may work for Homer Simpson, and we can all still cheer for the Canadarm, Man has been having a harder time with his space equipment lately. Some highlights:

In July 2013, a Russian Proton-M rocket fell apart only 17 seconds after takeoff from a Kazakhstan cosmodrome. The “lost luggage” included three navigation satellites, but there was bigger fallout from the disaster: the rocket had more than 600 tons of poisonous propellants, and officials were scared it would create a toxic cloud over the city of Baikonur. Heavy rains eventually scattered the fumes and nobody was hurt.

An Orbital Sciences Antares rocket loaded with supplies for the International Space Station exploded 15 seconds after liftoff in October 2014. NASA’s launch commander was doing the usual, laconic Right Stuff delivery with “Main engines at 108 percent, attitude nominal,” just before liquid oxygen and refined kerosene propellants from the rocket burst into a fireball, and fires erupted around the launch pad. Property damage was extensive but there were no injuries.

Virgin Galactic’s SpaceShipTwo began to disintegrate 34 seconds after its October 2014 takeoff. Sadly, the disaster came down to pilot error: the co-pilot had unhooked the wings while traveling close to the speed of sound where aerodynamic forces become unpredictable. As the plane disintegrated, he two pilots fell from 50,000 feet, facing the threat of ruptured lungs and dismemberment. One pilot was killed, while the other survived with only a shoulder injury.

But when things go well, they can still go spectacularly well—Neil deGrasse Tysonpurring-enthusiasm well.

In November of last year, the European Space Agency landed a probe on a comet for the first time in history. Plucky little Philae, accompanying the Rosetta spacecraft, travelled 6.4 billion km over more than a decade to collect scientific data about the comet. Philae’s batteries died after a few days of sending info, but scientists hope that when the comet’s orbit is closer to the sun this August, Philae will get enough solar energy to wake up again.

And 2014 finished with the most awesome cruise control ride ever designed. The Orion spacecraft went up empty and traveled for four hours and 24 minutes, testing parachutes, the emergency abort function and the craft’s heat shield, before landing safely in the Pacific. It flew faster and further than any similar craft since the Apollo moon program, but that’s not the point. The flight was a crucial step in NASA’s goal to have astronauts on Mars and on an asteroid by the 2030s. We’re going to Mars, people! Get excited.

—Sara Tatelman


If one Dutch-American company has its way, humans will be eating, sleeping and hanging out on Mars by 2025. The nonprofit Mars One is looking for four hardy pioneers to undertake a one-way journey to the Red Planet; they’ll be joined by four more émigrés every two years. Each “settler” will go through eight years of technical, agricultural and medical training before rocketing away.

“No new major developments or inventions are needed to make the mission plan a reality,” the Mars One folks state confidently on their website… while also predicting it’ll only cost $6 billion to send the first four astronauts up. Mars One plans on raising the funds through sponsorships, selling broadcasting rights, intellectual property revenues and other income streams it compares to the Olympics’ financial model.

A lifetime on Mars may appeal to the explorer types, but research by MIT PhD candidate Sydney Do suggests the folks who plan to go won’t live much longer than a couple of months. Without special nitrogen-generating equipment, the first human would suffocate in 68 days (yep, the trip’s not all about oxygen). And the equipment that would solve the dilemma would be too big to fit in a lander.

So… a price tag in the billions? Risk of suffocation and asteroids slamming into you at speeds of more than 25,000 km per hour? Yes, we’re told that NASA and other government operations don’t bother to insure deep space projects, but we’re talking about the ultimate property and casualty challenge. Makes you wonder who’s going to provide the coverage out there.

—Sara Tatelman


Copyright 2015 Rogers Publishing Ltd. This article first appeared in the February 2015 edition of Canadian Insurance Top Broker magazine

Transcontinental Media G.P.