Aon: Space Insurance Rates To Increase Up To 30 Percent
[Satellite Today – 3-21-08] Space insurers will raise premiums up to 30 percent following failures in 2007, according to the new Aon Space Market Review, Aon Corp. announced March 20.
Claims for 2007 are estimated to reach $835 million, which includes the failure of the Sea Launch rocket carrying the NSS-8 satellite in January and the September Proton failure that destroyed JCSat-11. Sea Launch returned to flight in January and has performed a pair of missions in 2008, while Proton suffered another failure when a March 15 mission left the AMC-14 satellite short of its intended orbit.
Another 2007 claim of up to $256 million was filed after the Rascom-QAF1 satellite suffered a helium leak in December, reducing its lifetime drastically.
Ultimately, insurers looking to win business need to persuade their management of the rationale behind offering competitive rates, the review said. While 2007 was an uncharacteristic year for space claims, when set against the more reliable experience and good market profitability of the previous five years it was not inconsistent with longer-term industry trends. If insurers perceive 2007 and early 2008 as an indication of higher claims patterns to come, this could lead to tough negotiations over the coming months.
“Competition will inevitably exert downward pressure on rates, but at present it’s a battle of wills between insurers’perceived need to charge more in response to increased claims versus the laws of supply and demand,” Peter Elson, senior managing director of Aon Space, said in a statement. “Due to high capacity, competition will be rife on attractive business and where the sums insured are low. Conversely, for less proven technology or systems with reliability concerns — especially when combined with a need for high levels of insurance — the market will prove stickier in pursuing its price targets. We’re therefore likely to see more differentiation in pricing not only between risks but also amongst insurers for any given risk.”