WASHINGTON — New trade sanctions aimed at Russia’s space sector were announced March 9 by UK Foreign Secretary Liz Truss.
While the announcement focused on new aviation sanctions strengthening an overflight and landing ban imposed on Russian aircraft in response to Russia’s invasion of Ukraine, additional trade measures “will prevent UK exports of aviation or space-related items and technology to Russia, including related services such as insurance and reinsurance services.”
“This means cover is withdrawn on existing policies and UK insurers and reinsurers will be unable to pay claims in respect of existing policies in these sectors,” the announcement states.
The announcement said “the new measures will further tighten the growing economic pressure on Russia and ensures the UK is in line with sanctions imposed by our allies.”
The sanctions align the UK with aerospace-related export bans the European Union adopted in February “covering goods and technology suited for use in aviation and the space industry and prohibits the provision of insurance and reinsurance and maintenance services in relation to those goods and technology.”
According to Seradata, a UK firm that tracks space insurance, the UK’s newly announced sanctions, combined with actions already taken by the United States and the European Union, further isolate Russia’s aerospace sector. David Todd, Seradata’s head of space content, said the moves could leave Russian communications satellites owned by Gazprom and Moscow-based RSCC uncovered in the event of a failure.
“The big picture is that Russia is now isolated from space insurance unless there’s a regime change,” Todd said.
The UK, Europe and U.S. are the core markets for space insurance services. Todd said underwriters in the UK alone provide about 30 percent of the global space insurance market’s coverage capacity.
Following the sanctions, he said Russian companies will either need to scour markets that have not traditionally provided this kind of coverage to any meaningful extent, or seek domestic sources where this capacity has historically been limited.
“A lot of companies self insure, and that might have to be the way it goes for the way forward,” he added.
One insurance source described the ban on covering Russia’s space risks as “not a huge problem” for the market because “relatively little” Russian space hardware has coverage.
“There’s a lot less Russian kit being launched compared to 10-20 years ago [when this] would have been much more of a headache from an insurance perspective,” the person said.
“OneWeb is obviously a customer who is significantly impacted, but there are very few others that are and therefore the pain to the market, and the impact to the market, is relatively minor.”
UK-based OneWeb said Sept. 2 that it had secured an insurance policy worth more than $1 billion to cover what was then 10 remaining Russian Soyuz launches to complete its constellation.
However, in the wake of Russia’s war in Ukraine, the company said March 3 it had suspended the six launches it had left to find non-Russian alternatives.
Because of the Soyuz’s high level of reliability, Todd said the loss of six insured OneWeb Soyuz launches affects only about $20 million premium income for the market.
Insurers were set to reap $700 million in gross premiums (before broker deductions) for 2022 before the Ukraine crisis disrupted missions using Russian launch vehicles, according to Seradata’s research.
But while a fraction of these premiums are derived from OneWeb and other non-Russian customers that had plans to launch with Russian vehicles, an underwriter said Russian space risks that are usually insured in Russia and then reinsured internationally are “not insignificant.”
The underwriter said the market currently expects there is about “$120 million of premium in 2022 that the international market will forgo due to sanctions and prohibitions on insuring Russian risks.”
This article was updated March 10 to provide more details on the impact of the UK’s ban on insurance services to Russia