Space jam: Why low orbital claims are bringing insurers back to Earth

Increased space launches are testing the limits of insurance, as space insurers’ results are reportedly plummeting back into the stratosphere.

In what may be the ultimate coverage gap, more than 10,000 satellites are estimated to be orbiting Earth right now; of them, only 300 are insured, according to a recent paper on space insurance by legal firm Clyde & Co.

“The rapid expansion of using low Earth orbit satellite constellations, particularly by private companies…is new and now comprises 88% of the total satellites,” Clyde & Co authors Neil Beresford, Eric Retter, and Wietske Felmore write. “In one report, it is anticipated that around 20,000 satellites will launch by 2030.”

Satellite insurance is not a legal requirement in the U.S. or Canada, as it is in Europe and the U.K., the authors observe. And low-Earth orbit satellite constellations used for broadband communications are largely uninsured or self-insured.

“Practical difficulties of assigning liability and determining the amount of compensation, along with the recent uptick in large satellite claims, have already prompted some insurers to exit the in-orbit satellite insurance space,” the paper states. “Increased premiums may result in changes to the types of satellites launched, the reuse of parts, spikes in renewals, and whether insurance is secured at all.”

Space insurance is modelled on aviation insurance, but space premiums are 10 to 20 times aviation premiums, Reuters reported in 2021. And the severity of claims is exponentially higher as well.

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Space.com reports space insurers saw close to $1 billion in claims in 2023, while collecting only $500 million in premiums — a 200% loss ratio.

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Australian law firm Lander & Rogers notes two large claims happened in 2023. They include the failure of the main antenna of the ViaSat-3 F1 Americas communications satellite in April 2023 (insured for $421 million), and the power subsystem failure of communications satellite Inmarsat-6 (I-6) F2 (insured for US$349 million).

One major issue for space insurers is determining whether insured damage results from some internal operations failure on board the satellite, or whether the satellite has collided with space junk. Liability for damage caused by collisions with space debris is not subject to any international regulation, although governments are starting to address the issue, Clyde & Co. reports.

“In April 2025, the Canadian government consulted on the Changes to Licensing Requirements and Conditions of License on Space Debris Mitigation, proposing that licensees of satellites submit space debris mitigation plans, including the requirement to deorbit within a certain timeframe, and to develop mitigation measures to reduce collisions,” Clyde & Co authors write

Aside from losses caused by space junk, insurers have seen other space risks recently emerge. They include commercial space activities such as space stations, mining for resources in space and space tourism. Clyde & Co says none of these risks “clearly fall within existing regulatory frameworks and, in the U.S., are being authorized by the FCC on an ad hoc basis.”

What’s more is the question of whether cyber policies on Earth cover cyberattacks in space.

“For example, cyber-attacks may threaten satellite systems directly, potentially triggering cyber policies,” Clyde & Co authors say. “Depending on the policy wording, it is uncertain whether the territorial limits of a cyber policy that covers a ‘loss’ occurring ‘anywhere in the world’ would be captured by acts committed in space, and, depending on the facts, whether such an attack would be captured by a cyber war exclusion.”

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.