DUBAI, United Arab Emirates — The price of insuring a commercial satellite’s launch and first year in orbit has dropped by around 50 percent in the past six years and has left the market vulnerable to a violent shock that could occur with just one launch failure, insurance underwriters said.

For insurers, the nightmare scenario is the failure of Europe’s Ariane 5 rocket, which unlike competing vehicles typically carries two satellites at a time into orbit. On at least three occasions in the past three years, Ariane 5 launches have carried satellites whose combined insurance coverage is $750 million, according to figures compiled by XL Insurance of New York.

Given that total insurance premiums for the global space insurance market do not exceed $1 billion, the failure would wipe out 75 percent of the year’s premium income in a single stroke.

Despite this underlying fragility, new underwriters have been pouring into the space insurance market, buoyed by the fact that insurers have made money on satellite coverage in every year but one in the past decade — and that one year, 2007, was close to break-even. Gone are the memories of 1998 and 2000, years when claims totaled more than $1.5 billion, outstripping total premiums that were around the same level as today.

It is not just an Ariane 5 failure that could shake the industry. The other major commercial launch vehicle, Russia’s Proton, occasionally carries satellites insured for well over $400 million.

Ariane 5 and Proton are both well-proven vehicles — one reason that in the past five years most claims payments have come following in-orbit satellite failures, not rocket failures.

XL Insurance Vice President Christopher Kunstadter said the total insured value of satellites in geostationary orbit today is around $22 billion. Two or three big failures, for whatever reason, would shake the market.

“Maybe it’s still a healthy business,” Kunstadter said of space insurance in a Feb. 28 presentation to the World Space Risk Forum here. “But rates are low. Margins are increasingly thin. We really are at a point that could be a tipping point. Logic would have it that if current rates are one-half what they were in 2004, then premium volume should be about half what it was then. But it’s about the same.”

Satellites mostly fail in their first year in orbit, which is one reason the policy that accounts for some 80 percent of annual premium income covers the satellite’s launch and first 12 months of operations. After that, one-year policies can be purchased.

Simon D. Clapham, an underwriter at London’s Liberty Syndicate 4472, associated with Lloyd’s, said the decline in premiums has been so dramatic that his company has focused on in-orbit policies only, steering clear of launch risks.

“The margins are incredibly narrow given the reduced rates,” Clapham said. “If we were faced with more than $1 billion in losses in a given year now, there would be a knee-jerk reaction and prices will shoot up.”

Insurance is usually a satellite operator’s third-biggest expense after paying for the satellite and a launch vehicle. Paying a 6 percent premium for the satellite’s launch and first year in orbit is now not uncommon.

Marco Ramadoro, chief executive of space insurance underwriter Satec of Italy, said the market’s current overcapacity is the result of a decade’s profitability. Currently there is about 50 percent more space insurance coverage available than what is needed to cover the industry’s annual need for insurance. The buyer’s market is forcing rates down still further.

“There are only 20 to 23 insured launch events each year; these are small numbers,” Ramadoro said. “A big loss could provoke a big reaction.”

Kunstadter said that despite the sharp drop in insurance premiums, several large satellite fleet operators have remained outside the market, declining to insure their spacecraft. Others insure only the launch phase and do not continue coverage once their satellites are in orbit.

For owners of smaller fleets, Kunstadter said, insurance is viewed as mandatory since these companies could not sustain the loss of a satellite.

Peter B. de Selding was the Paris bureau chief for SpaceNews.