India enters the troubled space insurance market

TAMPA, Fla. — As global markets reel from a series of huge losses, Indian insurance specialist Tata AIG is expanding into space.

Building on its 22-year-old aviation market expertise, Tata AIG announced on May 13 that it has begun offering in-orbit third-party liability insurance that covers personal injury and property damage. .

Sushant Sarin, president of commercial operations at Tata AIG, a joint venture between Indian conglomerate Tata Group and U.S. insurance company American International Group (AIG) with more than 8,750 employees, said the company’s satellite-based It is India’s first private insurance company to offer insurance for

“This innovative product meets the growing needs of satellite manufacturers and operators in the Indian space sector, especially in the wake of recent solar storms that have highlighted the potential dangers faced by orbiting spacecraft. We respond,” Sarin said.

“We are confident that this will enable Indian satellite companies to operate with more confidence and contribute to India’s space travel ambitions.”

Senior Vice President Deepak Kumar said Tata AIG will work with international reinsurers to reduce risks.

Tata AIG will now offer its own property damage coverage for satellites and launch vehicles during pre-launch, launch and in-orbit operations.

Kumar, who also heads the group’s reinsurance, credit and aviation insurance, said there are about 189 startups in India developing space-related businesses.

“New entrants to the space economy are seeking financial risk mitigation tools to ensure the sustainability of their operations,” he said in an email.

“Tata AIG will be a natural partner for such start-ups.”

turbulent times

According to Dubai-based underwriter Elseco, approximately $2 billion in space insurance claims have been reported in 20 accidents in the past 12 months, which accounts for the estimated value of all insured assets in orbit at $23 billion. This corresponds to nearly 10%.

Most of these events occurred in 2023. miserable year For markets that are questioning their ability to cover future risks.

The Viasat-3 failure and power issues affecting the first four SES O3b mPower satellites are among the most high-profile claims.

Premium rates for some space risks jumped 100% in the last three months of 2023 compared to the same period in 2022, Elseco Chairman and CEO Laurent Lemaire said.

Lemaire said about $1 billion in claims have been filed since the beginning of this year, and interest rates continue to rise.

Still, he said, after falling over the past few decades, interest rates are still about 37% lower than they were in late 2002.

“While there have been few major losses in this space, the space insurance market will work together to ensure continuity of coverage,” Tata AIG’s Kumar said.

He added that the increase in space activities will also increase the demand for insurance, bringing in more income and making the market more sustainable.

He noted that India has eased foreign investment regulations, among other measures, in a bid to increase its share of the global space economy, currently estimated at about 2%.