Not many risks are too far out for Lloyd’s. David Wade is a space underwriter with Atrium Space Insurance Consortium (ASIC) and a recognized expert in the business – he recently spoke at the 15th International Space Insurance Conference in Venice. Before he left for Italy David gave us a 60 second grand tour of the outer limits of risk.
How on earth did you become a space underwriter?
I was always interested in space, but didn't come straight into insurance. To get involved in the space sector, firstly I did an undergraduate degree in Aerospace Engineering and then specialised in space by completing a Masters in Astronautics and Space Engineering.
After graduating I worked for a satellite company based in Newbury, Berkshire designing component parts for satellites before moving to Kingston University to become a lecturer in Satellite Systems Engineering. Only after lecturing and doing research for six years did I move to the insurance market.
What special skills does a space underwriter need?
With only 150 satellites in orbit and perhaps 25 satellites being launched per year, statistics are less meaningful than most other classes. Instead we have to use experience and engineering judgement to assess the risks. Most space underwriters have some level of engineering support.
At ASIC, the London-based underwriting team is supported by a Canada-based engineering team, with almost 60 years of satellite industry experience between them. Having good engineering support however is only of use if the underwriter can translate the engineering risk assessment into a suitable coverage design, and a thorough detailed bespoke policy wording with no ambiguities.
Is space a growth industry?
The space industry is a growth industry. Following hurricane Katrina, which knocked out all terrestrial communication services, there was a renewed emphasis in satellite phones.
This has grown into a broader interest in mobile communication services using satellites (which will not be affected by hurricanes or other extreme weather) and this is one of the growth areas at present. Another area is the demand for high definition television which requires more bandwidth, and therefore more satellite transponders than standard definition. Broadband services via satellite will also grow in the near future.
Apart from satellites, what else in space will need insuring in the future?
Satellites will remain the focus of the space insurance market for the foreseeable future. Although space tourism is discussed and eyed as a potential market, at least for the next decade the majority of space tourist activities will be suborbital in nature.
Most of the vehicles that are likely to be successful in this arena are more like aircraft with rocket engines strapped to them, as opposed to rockets with wings.
One area that is likely to come to the space market however will be the commercial flights of goods and provisions to the international space station. When the space shuttle is retired next year, NASA intends to launch food, water and experiments to the space station using a commercial service.
We often hear about missiles shooting down satellites and space junk: is space getting riskier?
We have over the years seen a handful of times when satellites have been targeted by missiles, but this is only one source of the debris that is in orbit.
Other sources include defunct satellites, spent rocket stages that were not vented at the end of their mission which have exploded, astronauts’ tools and even the glove from a spacesuit.
Over 18,000 pieces of debris are catalogued and tracked using radar. Hundreds of thousands of pieces too small to track with radar are also in orbit.
The debris does pose a real threat although the threat posed depends on the orbit of the satellite. The density of debris is greatest in low Earth orbit (200km to 2000km in altitude).
Low Earth orbits are used by the scientific satellites, the space shuttle and the space station. Insured satellites in this region tend to be the Earth observation satellites that take images for applications such as Google Earth.
The majority of insured satellites are communication satellites in geosynchronous orbit (36,000 km altitude).
Debris is an increasing risk factor that underwriters need to consider, although at present the risk posed by debris strike is still significantly lower than other risk factors such as electrical or mechanical failure.
Other classes of insurance have a legal framework with recognized jurisdictions behind them. Is space still the final frontier?
Space is a lot more regulated that many people may think. The United Nations space conventions provide the framework.
The UN Outer Space Treaty (1967) forms the basis of space law and the other conventions, such as the UN's Convention on International Liability for Damage Caused by Space Objects (1972) governs who is responsible for damage caused to other space objects or by space objects falling to the ground.
Any satellite operator wishing to launch a satellite must apply to the International Telecommunications Union (ITU), an affiliate of the UN, via a national government to be assigned the frequencies that they can use, and in the case of a geosynchronous satellite, the orbital slot at which the satellite will be positioned.
In the UK, for example, the UK Outer Space Act (1986) lays down the framework for satellite operators wishing to be represented by the UK government. Provisions within the act include the need to purchase £100 million of third party liability cover.
Marine underwriters can go to sea and aviation underwriters can fly in an aircraft: do you have any desire to go into orbit?
The chance of going into orbit is very slim. There will be a viable market for suborbital space tourism flights, but there is a difference between suborbital jaunts whereby you briefly exceed 100 km in altitude and thus officially enter space and going into orbit for a two week stay at the space station.
The difference in price is also marked – US$200,000 for the Virgin Galactic experince, versus US$30m for a two week stay at the space station.
My interests are strictly in the applications of satellites. I take great delight in hearing of new satellite applications that help people on Earth.
Examples such as using satellites to identify areas of still water in India so malaria treatment can be targeted to those most likely to need it; or growing pure crystals of insulin in weightless conditions so that scientists can try to find a cure for diabetes.
These are the aspects that should bring the use of satellites and space to the public's attention. Only by recognising how the use of space and satellites benefits every man, woman and child on Earth will space exploration get the funding and recognition that it truly deserves.
