Coverage for the Final Frontier: The Tumultuous Landscape of the Space Insurance Industry
· By Charles A. Smith ·
As the recent catastrophic failure of Blue Origin’s New Glenn rocket dramatically showed, spaceflight can be risky. Naturally, many operators seek insurance to protect against such risk. Space insurance is a decades-old industry in its own right, with a broad array of policies on offer. However, the insurance marketplace has been struggling in recent years, with corrosive effects on the space industry as a whole.
There are four categories of space insurance: pre-launch, launch, orbit, and third-party liability. But the landscape of the industry is rife with issues.
The 4 Categories of Space Insurance
Pre-launch insurance is, in many ways, the broadest form of insurance. The extent of pre-launch coverage depends on the policy in question, but it typically covers satellites from the point of manufacture, through ground transport, up until the moment of rocket ignition. This category of insurance only makes up a reported 18 percent of the total space insurance market and is heavily skewed toward larger, higher-cost satellites; 92 percent of satellites larger than 200 kilograms carry pre-launch insurance.
Launch insurance covers satellites from the moment of ignition up until deployment in their final orbit. It covers catastrophic launch failures and forms of partial losses, such as the placement of a satellite in an incorrect orbit or technical failures of the satellite that may directly connect to issues during launch. A reported 88 percent of commercial launches held such insurance in 2025, making it a quite high policy-adoption rate.
Orbital insurance covers satellites against damage and degradation that happens during orbit. This form of space insurance has emerged as the most problematic segment of the industry. It typically covers catastrophic failure that happens as a result of in-orbit collision or technical failure, as well as partially covers losses incurred from degraded performance. Lifetime policies are rare, and it is more common for operators to take out sequential single- or multi-year policies on a satellite during its service lifetime. Historically, the majority of claims have related to technical failures, with 38 percent of all claims derived from power failures.
Third-party liability insurance for satellites covers the customer’s financial liability for damage to property or bodily harm to others, typically resulting from an accident. This is the most common form of insurance to be legally mandated: The United States requires third-party liability insurance for launch and deorbiting, while the United Kingdom and EU require third-party liability coverage for a satellite’s entire lifecycle. No third-party liability claim has ever been filed in the history of the space industry, although insurers warn that such a claim could be financially ruinous for the satellite operator.
Corrosive Coverage
The space insurance market has faced a series of challenges over the last year, which have destabilized the industry. Technical challenges make claims investigation difficult. Because it’s impossible to directly inspect damaged property in space, establishing what, and therefore who, is definitively responsible for any given failure is likewise a tall order. This information gap leaves insurers financially responsible for paying the entirety of damages. Space debris poses a growing problem, as legal uncertainty persists over liability for the resulting damage. A reported 30 percent of orbital insurance contracts specifically exempt space debris impacts from coverage.
In 2023, a series of high-profile satellite failures resulted in the industry paying out over $1 billion in coverage against just $500 million in revenues from insurance premiums. Several major insurers left the market entirely in response. Compounding the problem is a lack of available reinsurance, which is specialized insurance to protect providers from unexpectedly large losses. Major reinsurance firms have pulled back from the space insurance industry, and insurers that remain have raised premiums to compensate. Commercial space companies have responded predictably by increasingly operating without insurance. In 2024, only an estimated 300 active satellites of more than 10,000 had in-orbit insurance.
Lack of access to insurance has a corrosive impact on innovation in space. Unavailability of affordable insurance keeps innovative startups out of the industry, as one faulty launch can bankrupt small companies. Operators may respond to a lack of insurance availability by building more technical redundancy into satellites to offset failure risk, but this can reduce the efficiency and lifespan of satellites. However, most companies have adapted by operating constellations of smaller, disposable satellites instead of larger, more expensive ones. Yes, these smaller satellites often have shorter lifespans and are more failure-prone, and this contributes to the growing issue of space debris. While some insurers have responded by offering innovative policies better-suited to covering constellations of small satellites, the market remains unstable.
Functioning insurance markets are necessary to encourage innovation and risk-taking in any industry, doubly so for an industry as technically challenging as spaceflight. However, emerging challenges in the space insurance marketplace are, in turn, causing their own difficulties in the space industry. Regulators and industry leaders alike should take heed if they want innovators and investors to continue to place risky bets on the final frontier.