Space reinsurance
The ceding of part of the space risk underwritten by direct insurers to reinsurers, essential to absorb very large single losses.
Summer 2023: the ViaSat-3 Americas reflector fails to deploy and Inmarsat-6 F2 loses its power subsystem. The two satellites belong to the same group, and their claims exceed the premium the market collects all year. Space reinsurance is the ceding of part of the risk underwritten by direct insurers to reinsurers. The mechanism is essential in a market where a single loss can represent several hundred million dollars, a significant share of the total annual premium collected across the entire sector. Global direct space insurance capacity is narrow and concentrated among a limited number of specialized players. Without reinsurance, a single insurer could not absorb the total loss of one major telecommunications satellite without endangering its solvency across all its other lines of business. Reinsurers most often step in on an excess-of-loss basis (the portion of a loss above a set threshold) or on a quota-share basis (a fixed proportion of every policy in a portfolio). The space market is both narrow and highly correlated. A year of heavy loss experience, such as a cluster of launch failures close together, can harden terms in direct insurance and reinsurance at the same time. A lag of several months between the loss and treaty renewal amplifies the market cycle specific to the space sector.
The Amos-6 satellite was destroyed with its launcher on September 1, 2016, for an insured value of roughly $200 million. That loss alone consumed a significant share of the global space market's annual premiums. It shows why reinsurance is essential to absorb a single loss of that scale.
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