A-Sat Debris May Affect Insurance Market

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  Space News Business

A-Sat Debris May Affect Insurance Market

By BECKY IANNOTTA
Space News Staff Writer
posted: 21 April 2008
02:04 pm ET





WASHINGTON –
Thousands of pieces of space debris left in low Earth orbit after a Chinese
missile destroyed an aging weather satellite last year have added risk that could affect space insurance coverage, said Christopher Kunstadter, vice president of
�underwriter XL Insurance.

 

The
debris is expected to remain in orbit for decades, with less than 20 percent re-entering the atmosphere
over the next 100 years, Kunstadter said
April 15 in a luncheon address to the Washington Space Business Roundtable. By contrast, the remaining debris from the U.S. Navy’s Feb. 20 shootdown of a wayward spy satellite using an SM-3 missile is expected to have all re-entered by June, he said.

 

The intentional destruction of China’s Feng Yun 1C satellite
�Jan. 11, 2007, increased the number of
in-orbit objects
measuring
10-centimeters or more
�in diameter from 10,000 to about 12,500, or by
25 percent
, Kunstadter said.

 

“We’re looking at the liability impacts of debris falling on the ground, and we’re looking at human commercial spaceflight – it’s riskier now,” he said.

 

The question, however, is whether insurance policies would cover collisions involving debris left behind by the Chinese anti-satellite test. Generally, satellite insurance policies do not cover against acts of war or intentional destruction
�by anti-satellite (A-Sat) devices, so the industry must address whether debris related to such events is similarly excluded, Kunstadter said.

“Is [anti-satellite debris]
considered a hostile action?
�That’s a tough one,” he said. “It will become a problem the first time there’s a loss, and until that happens, it’s really difficult to say what the technical probability of it is and how it figures into pricing.”

 

Kunstadter said the space insurance industry

currently is suffering from
the economic downturn in the United States, the weak U.S. dollar, shifting global power centers and alliances, and emerging economic risks such as terrorism, climate change and natural disasters. Over the past 10 years, the space insurance industry has
earned $500 million in total net profit, not nearly enough for most companies that target 30 to 50 percent returns, he said.

“Seven percent over 10 years in any business is not stellar and especially in a volatile business,” he said. “We’re in a loss position for last year and so far this year.”

The risk of launch and satellite failures are
obvious factors in
calculating insurance rates, but meteor storms and the expected peak of the 11-year solar cycle in 2010 and 2011 also affect the space insurance market, Kunstadter said. Space weather may have contributed to the failure
�of more than 25 solar arrays on 18 satellites, solar-array-circuit failures on 34 other satellites and other failures that have resulted in $900 million in
�claims since 2000, he said.

Comments: riannotta@space.com