MILAN – When commercial suborbital spaceflight companies lose the liability protection they currently enjoy, insurance coverage may initially be quite expensive.
That was the conclusion of a paper, by PwC Strategy& of the Netherlands and the Italian National Aviation Authority, presented Oct. 15 at the International Astronautical Congress here.
Insurance rates for suborbital spaceflight would be high because the activity is new. Companies have performed only 54 rocket-propelled launches, including demonstrations, tests and commercial flights. Of the 127 vehicle occupants, roughly 73 were spaceflight participants rather than crew, said Marco Cattadori of consulting firm PwC Strategy&.
Insurers considering the safety of vehicles right now probably would include test launches in their calculations. As a result, the failure rate of the vehicles would be in the range of 5 to 8 percent.
As companies perform more commercial suborbital spaceflights, “obviously the number of commercial launches will go up and the resulting failure rate will go down, which is exactly is exactly what we want,” Cattadori said.
Liability Rules
U.S. law currently protects commercial firms from liability from claims as long as the operator provides sufficient warning and spaceflight participants accept the risks. Legislation to extend liability protection, now scheduled to expire Jan. 1, is pending in the Senate and the House of Representatives.
If the so-called “learning period” for commercial human spaceflight were to expire now, companies could have trouble obtaining insurance to cover the risk of injury to passengers.
“We check it just doesn’t exist today in the insurance market,” Cattadori said. “But it could exist in a few years from now.”
Authors of the study considered coverage for individual passengers ranging from a ceiling of $300,000 to $5 million. If liability were set at $3 million per individual, an operator of a vehicle with six seats, like Virgin Galactic’s Delta class would pay between $1.3 million and $2.1 million to obtain $18 million in coverage.
The high cost could raise launch prices “a whopping 30 to 60 percent,” Cattadori said. “That’s why we are saying this is a scheme for the future, not a scheme for the present. We are entering to a more commercial era. As the failure rates of the vehicles go down, so do the insurance premiums. And therefore the overall costs go down.”
