Lloyd’s looks at commercial spaceflight insurance

In an article on its web site posted Thursday, famed insurer Lloyd’s of London looks at the potential business of insuring commercial human spaceflight. “Lloyd’s brokers and underwriters say there is capacity in the market to provide insurance cover for the commercial flights if underwriters are convinced about their level of exposure to passenger liabilities,” the article states, summarizing the developments by Virgin Galactic and then talking with a number of people in the insurance business, particularly in the small but established niche of space insurance.

Not surprisingly, there are a lot of questions about the level of risk and, thus, the availability of coverage and the rates for such insurance. “[A]t present until the design and construction of the craft itself is finalized then insurers will not be in a position to give any rating to the risk,” said Roger Bathurst, CEO of International Space Brokers. He adds that, if such insurance is provided, “the risk will be extremely specialist and the Lloyd’s market would be viewed as a natural home for what may be the final frontier for aviation risk.”

One area of concern for insurers is that the target market for suborbital spaceflights will be people of high net worth, creating a high degree of exposure for insurers in the event of an accident. “An aircraft which would be regularly full of very high net worth passenger would cause some concern for underwriters in terms of their exposure should any accident occur,” said Chris Gibbs, a space underwriter for Brit Insurance. That’s no surprise for people in the industry who have raised concerns about the availability and cost of insurance for commercial human spaceflight. As Pat Bahn of TGV Rockets has said on a number of occasions, “Amateurs talk propellants, professionals talk insurance.”

1 comment to Lloyd’s looks at commercial spaceflight insurance

  • Expect early firms to be situated in favorable jurisdictions for liability and several levels of liability protection such as the firm that the passenger has a contract with not having assets even if the liability waiver is pierced, holding companies in Bermuda, licensing of brands with brand equity by third parties, causes of action eliminated in favorable states and perhaps some creativity being put in indemnification such as a promissory note that is payable if an heir sues. Some manufacturers, operators and tourism facilitators will still want first and second party coverage. I hope Lloyds fairs better than MBIA and some of the other insurers of sub-prime mortgage backed securities.

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