Space insurers face up to 2007 losses, Aon

International

These are critical times for the space insurance industry, according to the latest report by broker Aon. Space insurers will be looking for premium increases of up to 30% following a series of major losses in 2007 when claims costs of US$835.0mn exceeded the market’s premium income of US$660.0mn. Losses in 2007 include the failures of the Sea Launch rocket carrying the NSS-8 satellite and the Proton carrying JCSat 11. However, the low point for the market occurred in December 2007 when, on top of the earlier losses, the Rascom 1 satellite suffered a helium leak resulting in its journey to final orbit with a heavily reduced lifetime and a potential claim of US$256.0mn to its insurers. Any hopes that the market’s prospects would improve in 2008 were almost immediately dashed by the failure earlier year of the Proton rocket carrying the AMC-14 satellite. The market’s sharp decline in fortunes come at the end of five profitable years for insurers as well as several years of reducing premiums as new companies (named by the Aon report as Atrium in London, Asia Capital Re in Singapore, Axa Corporate Solutions in Paris, Elseco in Dubai, Glacier Re in Zurich and Korea Re in Seoul) entered the market. Insurers are now under intense pressure to re-assess their pricing and income targets for 2008. Peter Elson, senior managing director of Aon Space, said that as a result of the large volume of available capacity, there will be strong competition for attractive business and for business where the sums insured are low. Insurers are likely to be much tougher on pricing for business where the sums insured are large or which involve the use of less proven technology or systems with reliability concerns.