Asia’s satellite market the ‘hardest’ in a decade—source
May 4 2021 by Andrew Tjaardstra
The satellite insurance market in Asia is at its hardest for a decade in line with a ongoing global trend, a senior market source told InsuranceAsia News (IAN).
Around US$450 million of gross written premium (GWP) is placed globally each year but since one loss can generate hundreds of millions of dollars in claims, the market dynamics change quickly. While launches are often the key causes of large losses, failures also occur during orbit.
Already in 2021, a major US satellite operated by SiriusXM Radio with US$225 million in aggregate insurance was lost after only launching in December 2020. In 2019, the ChinaSat-18 telecom satellite had a major malfunction several weeks after its August 19 launch resulting in a US$250 million loss. For ChinaSat-18, the People’s Insurance Company of China (PICC) was the primary insurer.
In China, insurer’s tend to provide capacity in the tens of millions — up to a limit of around US$40 million — the source said, adding that situation tends to be similar in Japan and South Korea. Regulatory requirements force the risk to be first placed locally — with the majority of the risk then reinsured globally.
This means the majority of the premiums and losses in Asia are handled by the global reinsurance market through the likes of Lloyd’s in London, Axa XL and Munich Re. Brokers with local and global networks are therefore key to placing satellite.
Expensive satellites can cost up to US$350 million with ‘cheaper’ ones priced at around US$150 million. Operators generally take over the cover when the satellite moves from the manufacturer to the launch pad.
According to Munich Re, the different types of covers available include pre-launch insurance, launch insurance, in orbit insurance and a combination of all three — something the reinsurer calls “launch plus life insurance”. Once in orbit, satellites tend to have a lifespan of 15 years and annual insurance renewals can be arranged based on engineering reports. Satellites depreciate in value over the period.
There are an array of satellite operators in Asia including Paris-headquartered Eutelsat, Japan’s JSAT and South Korea’s KSAT. Eutelsat has a Singapore office and is planning six satellite launches over the next three years, according to its website.
Asian governments are also big backers of satellite operators and sometimes provide insurance to help the industry develop. Jurisdictional laws around third party liability in space are also extremely important.
In Indonesia, a public private partnership (PPP) has raised US$550 million to fund a satellite called SATRIA which is aiming to launch in 2023. The plan is to connect around 94,000 schools and educational institutions, 50,000 government offices and 3,700 health facilities not linked by existing satellite or terrestrial infrastructure.
Lloyd’s is predicting that the global space industry will grow threefold by 2040 — from today’s US$300 billion to US$1 trillion boosted by private space companies such as Elon Musk’s SpaceX.
-
Insuring prosperity: APAC’s dynamic fine art and specie market in the frame as risk landscape, extreme weather drive demand
- June 26
As China's influence wanes, markets like Japan, South Korea, and Singapore are gaining traction, with family offices and new private museums in nearby regions driving demand for coverage and competition.
-
In unique Asia, underwriters look to stay dialed amid ‘unprecedented wave’ of cyber attacks
- June 24
A surge in cyberattacks is likely behind a 14% rise in large cyber claims in Asia during the first half of last year, with a new report shining a light on attacks on the financial services sector.
-
Strait of Hormuz tanker collision highlights dark fleet dangers, but not seen as war event
- June 19
Adalynn and Front Eagle collided on Tuesday in the Strait of Hormuz amid the ongoing tensions between Iran and Israel.
-
‘Surely, prices will go up’: Air India crash to push hull and liability rates, could impact product liability
- June 18
Brokers and a lawyer tell InsuranceAsia News that last week's fatal crash in Ahmedabad will have a wide-ranging impact on the aviation industry, with total losses set to be as much as US$475m.
-
Allianz General | Allianz General combines innovative protection solutions while powering social good to lead Malaysian market
The carrier proactively addresses emerging risks and evolving customer protection needs while giving back to the community.
-
Sedgwick | Asia’s Energy Transformation – Balancing Growth, Risk and Renewables
Energy market presents unique risks, especially in a region which includes China and Japan as well as developing nations like Vietnam and the Philippines.
-
Beazley | Turbulent Waters: the maritime energy transition challenge
Businesses are facing a complex transition to non-carbon energy sources amid a push to achieve net-zero emissions for the marine sector by 2050.
-
Aon | Navigating shifts in the global and Asia insurance markets
Neelay Patel, Aon head of growth for Asia, says the market in Asia is at an ‘interesting stage of the cycle’.