1. The arithmetic of catastrophe

Mary Robinette Kowal’s The Calculating Stars is about astronauts and administrators trying to save a species after a disaster. The book is full of people calculating odds: will the rocket work, will the colony survive, is the risk acceptable. Insurance underwriters do the same arithmetic for a living. They look at the rocket, the orbit, the operator, and the payload, then they name a price for the chance that it all goes wrong.

Entry 289 introduced insurance and liability. This entry focuses on the products themselves: launch insurance and on-orbit insurance.

2. Launch insurance: what it covers

Launch insurance protects the investment from ignition through early operations. A typical launch plus one-year policy covers:

  • Ascent failure: destruction of the launch vehicle and payload before reaching orbit.
  • Orbit insertion failure: failure to achieve the contracted orbit or operational state.
  • Partial failure: underperformance that reduces mission capability or lifetime.
  • Commissioning failure: inability to establish normal operations within a defined period, often 30 to 365 days.

The policy may pay the insured value, a percentage of it, or a reduced amount for partial loss. Deductibles and exclusions vary.

3. What drives the premium

Launch insurance premiums are not arbitrary. They reflect:

  • Launch vehicle reliability: a rocket with a long success record costs less to insure than a new one.
  • Mission complexity: direct geostationary insertion is riskier than low Earth orbit rideshare.
  • Payload value: more expensive payloads mean higher premiums.
  • Operator experience: a team with flight heritage gets better terms.
  • Market conditions: the space insurance market is small and cyclical. A string of losses can make premiums spike.

A typical launch insurance premium might range from 5% to 25% of the insured value, depending on these factors.

4. On-orbit insurance: the long bet

Once commissioning ends, the spacecraft must survive on its own. On-orbit insurance covers the asset against:

  • Total loss: destruction or irreparable damage.
  • Constructive total loss: the spacecraft survives but cannot fulfill its mission.
  • Partial loss: degradation that reduces revenue or lifetime.
  • Loss of revenue: inability to provide services due to an insured event.

On-orbit policies are usually annual. Premiums depend on health telemetry, operational track record, orbit, and the reliability of the design. A spacecraft with redundant systems and good telemetry gets better rates.

5. Exclusions and conditions

Insurance policies are contracts of limited promise. Common exclusions include:

  • War, terrorism, and nuclear events.
  • Intentional misconduct or gross negligence by the operator.
  • Design flaws known before launch.
  • Failures outside the policy period.
  • Damage caused by unlicensed or unauthorized operations.

Insurers may require conditions such as:

  • Compliance with licensing and debris mitigation rules.
  • Regular telemetry and health reporting.
  • Collision avoidance manoeuvres when warranted.
  • Maintenance of ground segment and command authority.

6. The desktop’s insurance profile

The desktop starts with no flight heritage. This matters. The first unit will pay new-entrant rates. Key questions for underwriting:

  • What is the replacement cost of the platform?
  • What is the revenue at risk if it fails?
  • How much redundancy is built in?
  • What is the operator’s contingency plan?
  • Has the design been reviewed and tested?

A credible answer to these questions can lower premiums. A vague answer can make insurance unavailable.

7. Self-insurance and retention

Large operators sometimes self-insure part of the risk. They set aside capital to cover losses instead of paying premiums. For a new programme this is harder: the capital is scarce and the risk is poorly known. A more common approach is to buy insurance for the first missions and retain more risk as flight heritage grows.

What this changes

  • Launch insurance covers ascent, orbit insertion, commissioning, and early operations.
  • On-orbit insurance covers the asset and revenue during the mission life.
  • Premiums depend on vehicle reliability, mission complexity, payload value, operator experience, and market conditions.
  • Policies have exclusions and conditions that must be managed.
  • The desktop will face new-entrant rates until it builds flight heritage.
  • The next entry will cover liability limits and risk allocation.