In a year marked by unexpected challenges, the space insurance market faced a significant shift in the second half of 2023, reporting claims totaling USD 826 million, according to Gallagher Specialty’s Plane Talking – Q4 2023.
Notably, over 85% of losses, including those from Viasat-3 and Inmarsat 6-F2, stemmed from post-separation spacecraft issues, reshaping the industry’s landscape.
Following these losses, insurers swiftly raised premiums across their space insurance portfolios, signaling a market-wide reevaluation. The adjustment, triggered by Inmarsat 6-F2’s loss, prompted insurers to recalibrate their strategies, focusing on long-term sustainability rather than short-term gains.
As 2024 approaches, a decrease in space risk capacity is anticipated, with BRIT being the sole insurer to exit the direct market in 2023. While others consider reducing exposure, a significant disparity exists between theoretical and deployed capacity, potentially mitigating immediate capacity losses.
The 2024 outlook for the space insurance market is marked by uncertainty, contingent on several pivotal factors. The direction will be shaped by the finalisation of renewals and reinsurance arrangements, determining the available capacity and potentially luring new entrants with an uptick in ratings.
The specter of large losses looms, particularly fueled by concerns surrounding the recently launched SES O3b spacecraft, which could exert upward pressure on premium ratings. Underwriters’ mettle will be tested as they confront sizable and attractive launch packages integral to their business plans.
Additionally, the advent of new launch vehicle and satellite technologies in 2024 may lead insurers to price risks higher, fostering competition for the limited pool of available premiums.
The prevalence of project delays adds another layer of complexity, allowing insurance buyers to defer decisions in anticipation of market stabilisation.
In summary, 2024 presents challenges for both buyers and sellers in the dynamic space insurance market. The ‘spot market’ nature of the industry emphasises the need for adaptability, as rates and security are finalised upon binding of insurers.
While optimism may suggest delaying decisions for potential pricing reductions, uncertainties persist, making 2024 a pivotal year for the space insurance sector, the report noted.
