Space
Poor loss experience creates volatile market
The insurance environment for Space risks is currently challenging and volatile due to a poor underwriting loss experience in 2023. There is a limited volume of new satellite launch business to be placed in 2024 and the insurance for many of the launches scheduled for 2024/2025 has already been placed. As a result, the market rate correction that insurers are seeking is likely to take longer to materialise.
Underwriting changes
The Global Head of Space at AXA XL (US), Chris Kunstadter, left the company in August 2024. Canopius has withdrawn from the sector from July 2024, retracting USD 15m of market capacity. Munich Re Syndicate also withdrew from the sector in August.
Notable claims
Aggregate space claims for 2023 and 2024 (YTD) stand at approximately USD 1.8bn, primarily due to a number of (early) in orbit failures. 2023 full year premium income was approximately USD 550m, with a similar figure expected for 2024.
Outlook
Expected range in rate changes for the next 6 months for claims-free portfolios
The Space insurance market is currently volatile. Each of the 25+ individual markets quote for their own share of the risk (i.e. no single leader) and rates can vary greatly from insurer to insurer. However, currently there is insurance overcapacity in the market keeping some pressure on composite pricing. For in-orbit renewals rate changes could be up to +100% from 2023 figures in some cases due to previous years’ losses. For launch risks (which are 'non-renewable' but generate greater premium volume) underwriters may seek market rate increases of +20% - +25% compared to 2023.
Expected capacity change in the next 6 months for claims-free portfolios
Overall available capacity is unlikely to change, but underwriters are increasingly deploying their capacity more conservatively on some technically challenging risks.
Expected coverage change in the next 6 months for claims-free portfolios
Unchanged
Aggregate space claims for 2023 and 2024 (YTD) stand at approximately USD 1.8bn, primarily due to a number of (early) in orbit failures.
Emerging risks
Space operations are particularly vulnerable to the rise in cyber activity by bad actors, be it state actors or terrorist organisations and awareness and concerns are growing amongst market participants.
Renewal recommendations
We advise our clients to market their satellite risks as early as possible to a) maximise negotiation time/leverage with underwriters, and b) to mitigate any further significant deterioration in rates in the event of further claims activity in 2024.
For further information, please visit the Lockton Specialty page, or contact:
Ian George
Head of Space
E. ian.george@lockton.com
Russell Sawyer
Satellite Account Executive
E. russell.sawyer@lockton.com