Author: Peter Elson
Ascot has arrived as a notable new entrant, while Nexus has withdrawn from the sector and several other markets have marginally increased their involvement for 2022.
As we look forward, the market pricing appears to be relatively stable to downward, depending on risk profile. “Blue Chip” launch risks remain highly sought after. In orbit placements with moderate sums insured and without significant technical concerns are experiencing the benefits of competition between insurers, especially those packaging multiple satellites.
2022 is on track to see a significant number of risks offered to insurers with elements of new-generation technology. In particular, new launchers such as Ariane 6, Vulcan and New Glenn are expected to come to market alongside software defined satellites from Airbus, Boeing and Thales. Although we note that new technology will require underwriters to ensure they have a full understanding of the hardware, Gallagher is confident that the space insurance market will be able to offer competitive products and pricing for these risks.
Following the imposition of sanctions by the EU, US and UK on Russian entities in response to the current conflict in Ukraine, several consequences are emerging for the space insurance industry. Russian launch services have been immediately affected – including Soyuz launches from French Guiana – with wide-ranging restrictions impacting financing, financial products, insurance and banking systems such as SWIFT. At the same time, recent events have highlighted the risk of confiscation and war perils.
Although the West has recently scaled back utilisation of Russian technology, we note that many commercial satellite manufacturers continue to use Russian components within their spacecraft. As such, we may see some significant manufacturing delays if these parts need to be re-sourced from alternative suppliers. Further supply chain issues such as transportation of satellites and launch vehicles, which has long been the domain of Russian transport companies, will also impair the space industry and its insurers.
The New Space sector continued to expand during 2021 with in excess of 1,700 smallsats launched, predominantly to build out the Starlink and OneWeb telecommunications constellations. A plethora of other Smallsat business ventures continues to pursue their business models, targeting the creation of new markets and revenue streams. Their success or failure will ultimately shape the longer-term smallsat sector.
To accommodate the increase in Smallsat demand, small launch vehicles are under development to compete with the larger rideshare missions currently available. 2022 is expected to see maiden launches of a number of such launchers. Apart from the obvious technical challenges, this new launch market could be held back by licencing, regulation and insurance requirements from multiple governments. Simply applying the same rules that exist for heavy-lift missions could significantly constrain if not stall these enterprises entirely.
According to Euroconsult, global satellite communications capacity is expected to increase more than five-fold to over 20 Tbps (Terabits per second) this year, depending on the pipeline of High Throughput Satellites coming on-line as predicted. In parallel, mega-constellations such as Starlink and OneWeb, are looking to land and scale their commercial operations. Demand for spacecraft services of all types is at an all-time high but, as with any dynamic business sector, there will be winners and losers. 2022 is forecast to be a pivotal year in the evolution and expansion of the Space sector. Gallagher Aerospace is able to provide comprehensive support for clients through its highly experienced team. We are investing further in people and technology in 2022, in what is proving to be an exceptionally exciting period of expansion and structural change for the space industry.