Features of space risk insurance

Starting from Baikonur on March 21 will be insured for 3 billion rubles. At the same time, cosmonauts, the Soyuz launch vehicle, the Soyuz-MS08 spacecraft, the launch pad of the Baikonur cosmodrome, and third party liability during the launch will be insured. This was told to us by Pavel Shutov, President of the Russian Association of Aviation and Space Insurers (RAAKS). In addition, Pavel commented on what risks are most often insured in the Russian space program and how the insurance claims are investigated.

Interviewer: Sergey Karpov
Respondent: Pavel Shutov

On March 21, the manned spacecraft Soyuz will start from Baikonur. Tell me, what is the "standard set" of insurance services for such launches?
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In such launches, the launch vehicle and the spacecraft are insured for the full cost. In this particular case, the insured amount will be just over three billion rubles. Third-party liability is also insured at launch - the property interests of the insured are protected, which are associated with the risk of liability for causing physical or property damage to third parties on Earth and in space. A kind of CTP for space launches. In this case, the limit of liability is three billion rubles.

The entire cosmonaut corps is insured - a continuous insurance coverage is provided for them throughout the year. Thus, pilots are protected on Earth - during preparation, when launched into space and in space - during their stay on the ISS and during descent to Earth.

Also, the launch complex is insured along with the launch pad. For all launch complexes of the Baikonur Cosmodrome, an insurance contract is provided for a year. They are insured both at the time of start-up and at the time of the so-called inter-period.

To summarize, the property involved in the launch, people who fly, and liability to other persons that may arise in the event of an accident are insured.

Before insurance payments, for example, by automobile hull insurance, insurers are investigating whether the insured is really not guilty. Are there verification procedures before reimbursing space risks? What are they?

Of course, there are checks, or rather, a study of the circumstances. And the main result of such work is the conclusions of the interdepartmental emergency commission. The commission is composed of representatives of enterprises that participated in the production of space technology and directly in the launch, and from independent experts. As a rule, representatives of insurers are also involved in the commission. The causes and consequences of the accident are considered, conclusions and recommendations are made on how to prevent accidents in the future.

The act of this commission is the main document that is being considered for studying the insured event and determining the amount of insurance payment. When conducting an investigation, insurers are entitled to request additional documents to clarify details. The decision is made on the basis of the entire package of documents and the results of the investigation.

What are the differences between the insurance of space risks in Russia, if we compare them with insurance in the United States?

Insurance of space risks in the USA and Russia practically does not differ in any way. Very often, we participate in the reinsurance of foreign space risks in the same way that foreign companies participate in the reinsurance of our risks. The conditions are basically identical both in Russia and in Europe, the USA and China.

What companies in Russia are involved in space risk insurance? What are the requirements for such companies?

The number of companies in the space insurance market is small. Space risks are mainly involved in “VTB Insurance”, “Sogaz”, “Ingosstrakh”, “Alfa Insurance”, “Consent”, “VSK”. Space insurance - these are big limits, large insurance sums and, accordingly, the probability of large payments. Therefore, the main requirement for such companies is the financial sustainability of the organization. There must be a necessary set of financial and labor resources, high rating indicators - that is, everything that one way or another characterizes the reliability, financial stability and professionalism of an insurance organization.

Space risk insurance contracts are made through tenders. Customers of insurance services set a high level of requirements for reliability indicators and experience of insurers.

There are no definite figures in the requirement for the amount of financial resources, but accounting documents are considered and the company's ability to make payments on a large scale, which means insurance risks, is estimated.

Tell me, how does the insurance of such risks occur: do special agents deal with these or are contracts concluded at the level of company management?

As a rule, all companies that are involved in space insurance have a specialized unit for this. This is either a space insurance unit or a unit combined with aviation insurance - these are related areas. They may be called differently, but, in fact, they are involved in insurance of space risks. No agents are involved for this.

Is space risk insurance a profitable business or, above all, an indicator of the status of an insurance organization?

If you competently and skillfully deal with this area, pay attention to reinsurance and risk management, then this is a profitable business.

Any major risks give status to the insurance organization. Cosmos, of course, applies to them. This is a well-known, bright, "PR" type of insurance, but only for the sake of status, insurers will not do this. Too expensive.

What example of insurance compensation for space risks was the most memorable in your practice?

There are two of them - and both are linked to third party liability. In both cases, an accident occurred - the fall of a rocket - in the territory of another state. These are the most labor-intensive insurance processes. Participating in them are not interdepartmental, but intergovernmental commissions for the investigation of accidents. Much more extensive proceedings are underway. As a specialist, it was interesting for me to work with such difficult cases. Fortunately, insurance events related to injury to third parties during cosmic accidents are the rarest.

The first case, when I participated in payments under a third party liability agreement, occurred in Kazakhstan. It was an accident of the Dnepr launch vehicle with the Belarusian satellite BelKA-1. The second accident also happened in Kazakhstan - it was the Proton launch vehicle with the JCSAT-11 satellite on board.

What is the most common insurance in the Russian space industry? Which - on the contrary, is less common?

The most common insurance is third-party liability insurance. This is like a CTP for cars. Such insurance is established by the law "On Space Activity" and for all launches that are made from the territory of the Russian Federation, this insurance must be provided.

The rarest is the insurance of all sorts of financial risks in the operation of space technology. For example, it is insurance of loss of profit in case of a breakdown or failure of a spacecraft. This is an exotic insurance, but is sometimes found.

What insurance claims are most common in Russia?

Those that are connected with the space technology itself - the breakdowns or the total destruction of the vehicles and launch vehicles.

The statute of the RAAKS states that insurance companies of foreign countries can also become members of the association. Judging by the site, there are two such people at RAAX - both from Belarus. Are companies from non-CIS countries interested in membership in RAAX?

Some time ago we also had companies from Ukraine, but they decided to leave the association. On February 20-21, we held an international RAAKS conference, at which several foreign companies became interested in joining the association. Until we made a decision, I would not want to voice their names.

RAAKS for insurance companies is an information platform. This is an opportunity to participate in conferences, chat and share experiences. This is participation in various working groups and committees at different levels on the formation of a legislative framework and the development of regulatory documents. In other words, it is an opportunity to participate in lawmaking and exchange experience in the field of space insurance.

On March 21, Pavel Shutov will take part in the InSpace Forum 2018 - the international forum on commercial space and UAVs. He will be the moderator of the discussion on the insurance of space risks.