From earth to orbit: insurance for space tourism

From the historic moment in 1969 when Neil Armstrong first set foot on the Moon, marking mankind’s giant leap, technological progress has been remarkable.

Scorpius Space Launch Company (SSLC) made headlines this past February as the first-ever commercial company to successfully land their Type V propellant tanks on the Moon. Following closely, Virgin Galactic completed its most recent commercial space trip just last month. Indeed the race to space tourism is in full swing with trailblazers like Blue Origin and SpaceX also leading the charge.

With the global market for space tourism estimated at $977.4 million in 2023 and projected to exceed $6 billion by 2030, the sector is poised to be a lucrative opportunity for insurance brokers too. As developments unfold, the reality of a mainstream space tourism insurance market might be closer than we think, making understanding the risks of space travel increasingly crucial.

Insuring space travel: When does coverage start and end?

When it comes to insuring small space satellites and launch vehicles, coverage is relatively straightforward, noted Rob Schenone (pictured), head of aerospace and underwriting manager, North America, at AXA XL. However, as commercial space travel develops and mankind prepares to venture farther into space, it is likely to open a whole new floodgate of insurance risks.

Reflecting on the complexities of commercial space travel, Schenone emphasized that policies of the future will need to address a broad range of challenges. “With space tourism, the coverage requirements are completely different,” he said. “You need to consider when coverage should start—whether it should begin the moment passengers leave their homes or when they arrive at the launch facility. And when should it end? Should it cover them until they return home, or only until they land? Additionally, what if passengers experience health issues weeks later that are linked to their flight? Insurance needs to address these uncertainties and provide clear guidelines on coverage timelines and conditions.”

The specificity of coverage conditions is particularly intriguing in cases like Virgin Galactic, which blends elements of airline and space travel. (The innovative launch system uses both an aircraft and a spaceplane). This complexity makes it essential for underwriters to pinpoint precisely where airline insurance coverage ends and where space coverage begins.

An opportunity to develop innovative insurance solutions

Speaking on the overall landscape of the market, Schenone noted that only a handful of policies currently exist to insure commercial space travel. One of the main challenges with the sector is that commercial space travel is still relatively new, so insurers are not fully aware of all potential risks and are unclear about the obligations that parties involved—such as space tourism companies, customers, launch providers, and ground support—should have to each other.

“There have only been a handful of policies issued so far, and they’ve been very specific in their coverage. These policies have mostly been driven by companies in the field buying a couple of million dollars in coverage for a defined period. However, as space tourism becomes more popular, there will be better insight into what needs to be covered, and insurance will evolve to fill those gaps,” said Schenone.

For brokers, this evolving market represents an exciting opportunity to leverage the untapped potential of commercial space travel insurance. Brokers can seize this chance to develop and offer specialized insurance solutions that address the unique risks and challenges of this emerging sector, positioning themselves as leaders in a rapidly growing industry.

Why should brokers care about space tourism?

In addition to the opportunity to develop innovative solutions for a burgeoning market, commercial space tourism can offer brokers a collection of other advantages, including:

• Partnerships and networking: The space tourism industry involves collaboration with a range of stakeholders, including space travel companies, regulatory bodies, and technology providers. Brokers can benefit from networking and building partnerships within this dynamic and high-tech field.
• Diversification: Adding space tourism to their portfolio allows brokers to diversify their offerings and stay ahead of industry trends. This diversification can enhance brokers’ market position and attract a new client base interested in space travel.
• Risk management expertise: Space tourism involves unique risks that differ from traditional travel. Brokers who develop expertise in these areas can offer valuable risk management advice, enhancing their reputation as specialists in niche markets.
• High-profile clients: The space tourism market includes high-net-worth individuals and prestigious companies. Working in this sector can help brokers elevate their book of business and create opportunities for high-value, high-profile clients.