www.captiveinternational.com SPACE TOURISM 17
commercial space flight industry have
no meaningful risk financing solutions.
This is a classic example of where
brokers and agents should know when
to pitch a captive insurance solution.
Millions of dollars of untapped
commissions await the savvy broker
who understands when to pitch a
captive insurance vehicle.
stakeholders need insurance to
protect their investments and innovate
their service offerings. Commercial
space launch insurance is one of the
key requirements for humankind’s
continuing its quest to the stars.
Fortunately for brokers and agents,
this multibillion dollar market is
heavily regulated. Portions of the
Traditional space insurance is a
commoditised transaction. Thanks to
the US Federal Aviation Administration
(FAA), insurance coverage for
commercial satellite launches is
routine, with copious data for actuaries
and underwriters to leverage in
setting premiums. But there is a new
booming sector in the space industry:
commercial human space launches.
Welcome to the age of space tourism.
Since Yuri Gagarin’s orbit in 1961,
citizens from 38 countries have flown
in space. Space tourism insurance
started with American engineer and
eccentric multimillionaire Dennis Tito.
In 2001, he was issued a life insurance
policy via Russian insurer Avikos for a
private trip into outer space. No other
coverage was available. Tito’s brave
voyage created a whole new industry of
space tourism overnight.
The current dynamic in the space
tourism insurance sector involves self-financing
the risk through a mix of life
insurance and commercial launch
operators securing third party insurance
coverage. Many life insurance companies
are starting to decline claims made
pursuant to space launch mishaps.
Consequently, potential plaintiffs
(and their attorneys) are hunting for
any relevant general liability policies.
Commercial launch companies need
adequate coverage to continue to grow.
A void in the commercial market
is an opportunity for brokers and
agents to penetrate the industry
before commoditisation funnels the
opportunities into a race to the bottom.
This situation is a prime situation for a
captive insurance solution.
A tool for space tourism
Given the many unknowns regarding
liability for space tourism, captive
insurance should be a tool for all
space tourism providers. Realistically,
self-financing 100 percent of the risk
related to space tourism would be
cost-prohibitive for all but the largest
companies. As such, space tourism
companies may want to consider a
buyback deductible captive. With this
strategy a single parent captive would
be used in conjunction with a large
deductible insurance programme
offered through a traditional carrier.
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