Overcrowding in space?
New Swiss Re study says that increasing amounts of orbiting debris in space can pose a threat to operational satellites.
On February 11, 2009, a defunct Russian satellite, Cosmos 2251, collided violently with an operational satellite in the Iridium constellation (Iridium-33). Incidents such as this have prompted Swiss Re to examine the orbital debris risk more closely. A leader in the space insurance market, Swiss Re currently insures over 110 commercial satellites. The total insurance value for the market stands at approximately USD 20 billion.
Not just an environmental issue
The amount of orbital debris today is double that of two decades ago and over 30% higher than just five years ago. There are many thousands of metal fragments currently orbiting the earth. And among them there are nearly 200 spent rocket bodies which are doubly dangerous because they also pose an explosion risk. Moreover, at certain orbital points – called geopotential wells – the risk of collision is many times greater because of the strong gravitational pull they exert on drifting debris. Since debris consequently accumulates at these points, it can pose a threat to operational satellites orbiting in the direct vicinity. In other words, space debris is no longer an academic or environmental issue. On the contrary, it has the potential to damage or destroy high-value, operational satellites that perform vital communications and meteorological functions, with resulting revenue losses running into billions of US dollars.
Although the statistical probability of a collision remains comparatively low, projections are difficult to make because of the limited ability to observe objects in certain orbits and the uncertainty surrounding past and future debris-generating events. More importantly, the likelihood of a collision is increasing. This is because in one orbital region in particular – roughly 36,000 kms above the earth’s surface – growing numbers of satellites are being deployed and there is no natural debris removal mechanism.
No clear-cut liability
In the case of collision, the fundamental issue of liability remains dogged by legal uncertainty. Notwithstanding relevant treaties and debris mitigation standards, there are very few legal precedents either at an international or national level. To highlight some of these ambiguities, Swiss Re’s publication on the implications of collisions in space – “Space debris: On collision course for insurers?” – presents readers with a fictional case study of a dispute arising from a debris collision. The story of the plaintiff and defendant describes how the defendant owner of the drifting satellite has failed to conduct end-of-life disposal manoeuvres, contrary to its pledge to the U.S. regulatory authorities. The question is whether the defendant’s conduct constitutes a wrongdoing for which an action for damages may be brought.
Issues for insurers
Orbital debris poses two questions for insurers: What steps can they take to promote debris mitigation? And what measures may they need to adopt to protect the viability of their of their business lines if debris mitigation fails to keep collision risk at acceptable levels?
On their own, insurers cannot respond to the challenge space debris poses to their insured operators. The more logical and pragmatic approach is for insurers to work with insureds in, for example, promoting mitigation efforts. This could take the form of fostering a regime of legal certainty or collaborating with the scientific community to address this issue. This publication – “Space Debris: On collision course for insurers” – is a first attempt by one insurer to move in that direction.
Swiss Re Corporate Solutions provides broad, global insurance capabilities, including solutions for commercial insurance, large corporate risks, energy, aviation, engineering, professional liability and environmental and commodity markets. We offer structured, multi-line programs and can customize our offerings in order to help our clients mitigate their most complex risks. Swiss Re Corporate Solutions also offers innovative insurance-linked securities and catastrophe bonds, and has among the highest available capacity in the industry. For information about Swiss Re Corporate Solutions, please visit www.swissre.com/corporatesolutions.