1. Insuring Commercial NewSpace Activities Yaw Nyampong 3 rd Manfred Lachs Conference on NewSpace Commercialization 17 March 2015

2. Introduction Risks attendant to NewSpace activities  Launch risks  In-orbit risks  Commercial risks  End of life disposal etc Risk management options for NewSpace activities  Risk retention  Risk transfer – usually via insurance

3. Risk Transfer through Insurance CategoryCriterionCharacteristic 1 Actuarial Risk/uncertaintyMeasurable 2 Loss occurrencesIndependent 3 Maximum lossManageable 4 Average lossModerate 5 Loss frequencyHigh 6 Moral Hazard, Adverse selectionNot excessive 7 Market Determined Insurance premiumAdequate, affordable 8 Insurance cover limitsAcceptable 9 Industry capacitySufficient 10 Societal Public policyConsistent with cover 11 Legal systemPermits the cover

4. The Challenge of Insuring NewSpace Activities Risk pool of NewSpace activities is not large enough – The Law of Large Numbers may not be a useful rating tool Low frequency-high impact risks (Insurance works better with high frequency- low impact events) Very little historical data available for purposes of rating the risks Industry capacity is limited (estimated at $490 million for launch risks and $620 million for in orbit risks a few years ago) Premiums for NewSpace activities are likely to be very high Coverage is also likely to be very limited in the initial stages

5. The Challenges of Insuring NewSpace Activities Proposed NewSpace activities such as commercial suborbital flights and space tourism are not covered by any existing insurance regime (OECD, 2014). The few paying space tourists to the International Space Station have so far taken out personal accident insurance coverage (OECD, 2014). Should the absence/unavailability of insurance constitute a hindrance to the development and commercialization of NewSpace activities?

6. The Way Forward Role of law: In many countries the law requires space actors to procure insurance coverage on the basis of the maximum probable loss (MPL) that may be sustained as a result of their activities. This will have to be reconsidered if the desire is to encourage the development of NewSpace activities. Potential alternatives and/or complements to insurance may include:  Capping the liability of operators at an insurable level and making it mandatory for operators to procure insurance up to those limits  Exploring the possibility of transferring NewSpace risks to the capital markets through Alternative Risk Transfer mechanisms

7. Thank you for your attention!