Preparing for the worst in the space insurance market

When it comes to space, everything tends to happen on an astronomical scale. And nowhere is this more evident than in the space insurance market.

With approximately 30 satellite launches insured each year, and insurance coverage already provided for about 200 in-orbit satellites, the total insured exposure for these risks is currently in excess of a staggering $25bn.

With this in mind, three analysts from the Atrium Space Insurance Consortium (ASIC) – a leading specialist insurance business founded in 2007 to focus solely on the expanding space insurance market – have published a paper identifying the four main classes of realistic disaster scenarios for the space insurance market, and outlining the rationale behind the selection of each category.

shutterstock_139496471_7

Realistic disaster scenarios – or RDSs – have been developed by insurance market Lloyd’s of London to assist syndicates covering satellites to reserve funds for extreme space events, where an unusual event (e.g. a solar flare) exposes the syndicate to its theoretical worst-case loss.

These RDSs are regularly reviewed and were recently updated to reflect changes within the space industry.

The four classes have been identified as:

  1. An anomalously large solar proton flare affecting many satellites
  2. A generic defect causing undue space weather sensitivity in a class of satellites
  3. A generic defect causing unforeseen failures in a class of satellites
  4. Collision with orbiting space debris in a certain range of orbit altitude

CubeSats in space It is interesting that this was chosen as a breakthrough, because CubeSats – 10cm squared mini satellites – have been sent into space for over a decade. However, 2014 was the year where CubeSats’ potential really started to be realised, and are now being incorporated into significant research projects rather than just being a school research project. For us, one of the biggest uses of CubeSats in 2014 was Outernet, which is bringing a free broadcast-only version of the internet to the world. Although not as wide-ranging as the full internet in content, it will allow highly remote areas to access information that was previously inaccessible.

Before delving into the details or each RDS class, it would be useful to explain the basics of satellite insurance.

A satellite’s operational life can be broken down into two main parts: the launch, and in-orbit operation. The launch risk – which is the highest risk portion – exists for a relatively short period of time compared to the in-orbit life, which could be more than 15 years.

A launch policy usually covers the launch, orbit-raising, in-orbit testing and commissioning into service, plus anything that might go wrong in the first year of the satellite’s life. After this policy expires, owners/operators purchase in-orbit coverage, covering a satellite for the remainder of its life, usually on an annual basis.

Insurance is intended to cover only unforeseen and unforeseeable occurrences (i.e. random failures). As well as launch and mechanical failures, debris or meteoroid strikes and the effects of space weather are all covered under a typical space insurance policy. Acts of terrorism, civil unrest and war are not.

When a review of the space market RDS was undertaken in 2013, Lloyd’s managing agents for space and satellite risks were asked to report on four new RDSs on a trial basis for 2014. These four new RDSs – as outlined above – were adopted from 1 January 2015.

Image courtesy of NASA

Image courtesy of NASA

Large solar proton flares

In general, space weather-related problems result in relatively few insurance claims, because in the majority of cases the anomaly is temporary and has no permanent effect on the operation of the satellite. This is largely because today’s satellites are able to cope relatively well with the oddities of the space environment, without any problems.

The one exception, however, is solar proton flares. These large solar energetic particles are known to universally degrade solar cell efficiency. And one single solar proton flare could result in a large number of satellites losing a portion of their power generating capability, and hence insured capacity.

Generic defect causing undue space weather sensitivity

Although space weather is relatively foreseeable, up to a point, short-term variations and worst-case scenarios are less well defined. This class of RDS is intended to cover the case where a design change or deficiency creates an unexpected sensitivity to one or more kinds of space weather signature, leaving the satellite prone to certain anomalies. These anomalies can range from un-commanded operating mode changes to equipment failures that result in loss of control.

Undetected generic defect

This class of RDS is intended to cover an undetected generic design-related defect that affects a number of already-launched satellites. It can take a year or longer for such a defect to come to light and be identified.

Although the impact of such a defect can vary widely, depending on the size of the satellite and nature of the defect, this could result in significant losses in capability. For example, between 2000 and 2005, insurers were affected by fleet-wide failures due to satellites being launched with undetected generic defects.

Collision with orbiting space debris

The space debris RDS was initially discarded, as the probabilities of collision at the time it was introduced (2005) were not considered to be high enough to be of significant concern.

However, this conclusion had to be reconsidered following a sudden increase in orbiting objects after a Chinese experiment with an anti-satellite weapon in January 2007 caused destruction of the Fengyun-1C weather satellite. This was followed just over two years later by the accidental collision between Cosmos 2251 and the operational Iridium 33.

These two events represent the worst satellite breakups in history; a total of 5,579 fragments from the events were catalogued by the US Space Surveillance Network (SSN), and almost 5,000 still remained in orbit as of January 2013.

Consequently, the 2013 space debris covers lower-Earth orbit satellites, since this region is where the significant debris-related incidents have been experienced to date.

The authors of the article – Robin Gubby, David Wade and David Hoffer – note that a number of future industry developments could affect RDSs. These include the introduction of new technology into satellite design; an increase in the number of all-electric-propulsion satellites; and a significant addition to the population of lower-Earth orbit satellites, which could increase the risk of collision, debris, etc.

For the moment, however, the four existing classes of RDS appear to have the space insurance market well and truly covered.

Wanted man captured thanks to facial recognition

A Chinese man who was wanted by police for “economic crimes” – which can include anything from tax evasion to the theft of public property – was arrested at a music concert in China after facial recognition technology spotted him inside the venue.

Source: Abacus News

SpaceX president commits to city-to-city rocket travel

SpaceX president and chief operating officer Gwynne Shotwell has reiterated the company’s plans to make city-to-city travel — on Earth — using a rocket that’s designed for outer space a reality. Shotwell says the tech will be operational “within a decade, for sure.”

Source: Recode

Businessman wins battle with Google over 'right to be forgotten'

A businessman fighting for the "right to be forgotten" has won a UK High Court action against Google.. The businessman served six months’ in prison for “conspiracy to carry out surveillance”, and the judge agreed to an “appropriate delisting order".

Source: Press Gazette

UK launched cyber attack on Islamic State

The UK has conducted a "major offensive cyber campaign" against the Islamic State group, the director of the intelligence agency GCHQ, Jeremy Fleming, has revealed. The operation hindered the group's ability to co-ordinate attacks and suppressed its propaganda.

Source: BBC

Goldman Sachs consider whether curing patients is bad for business

Goldman Sachs analysts have attempted to tackle the question of whether pioneering "gene therapy" treatment will be bad for business in the long run. "Is curing patients a sustainable business model?" analysts ask in a report entitled "The Genome Revolution."

Source: CNBC

Four-armed robot performing surgery in the UK

A £1.5m "robotic" surgeon, controlled using a computer console, is being used to shorten the time patients spend recovering after operations. The da Vinci Xi machine is the only one in the country being used for upper gastrointestinal surgery.

Source: BBC

Virgin Galactic rocket planes go past the speed of sound

Virgin Galactic completed its first powered flight in nearly four years when Richard Branson's space company launched its Unity spacecraft, which reached supersonic speeds before safely landing. “We’ve been working towards this moment for a long time,” Virgin Galactic CEO George Whitesides said in an email to Quartz.

Source: Quartz

Google employees protest being in "the business of war"

Thousands of Google employees, including dozens of senior engineers, have signed a letter protesting the company’s involvement in a Pentagon program that uses AI to interpret video imagery and could be used to improve the targeting of drone strikes. The letter, which is circulating inside Google, has garnered more than 3,100 signatures

Source: New York Times

Computer system transcribes words users “speak silently”

MIT researchers have developed a computer interface that transcribes words that the user verbalises internally but does not actually speak aloud. The wearable device picks up neuromuscular signals in the jaw and face that are triggered by internal verbalisations — saying words “in your head” — but are undetectable to the human eye.

Source: MIT News

Drones could be used to penalise bad farming

A report by a coalition of environmental campaigners is arguing squadrons of drones should be deployed to locate and penalise farmers who let soil run off their fields. Their report says drones can help to spot bad farming, which is said to cost more than £1.2bn a year by clogging rivers and contributing to floods.

Source: BBC

Californian company unveil space hotel

Orion Span, a California company, has unveiled its Aurora Station, a commercial space station that would house a luxury hotel. The idea is to put the craft in low-earth orbit, about 200 miles up, with a stay at the hotel likely to cost $9.5 million for a 12-day trip, but you can reserve a spot now with an $80,000 deposit.

UK mobile operators pay close to £1.4bn for 5G

An auction of frequencies for the next generation of mobile phone networks has raised £1.36bn, says regulator Ofcom. Vodafone, EE, O2 and Three all won the bandwidth needed for the future 5G mobile internet services, which are not expected to be launched until 2020.

Source: BBC