Billion-dollar satellite risks upending space insurance
Viasat Inc. has more than $1 billion in orbiting satellites in trouble, and space insurers are bracing for market-rattling claims.
The company’s roughly $1 billion ViaSat-3 Americas satellite, central to expanding its fixed-broadband coverage and fending off rivals including Elon Musk’s Starlink, suffered an unexpected problem as it deployed its antenna in orbit in April. Should Viasat declare it a total loss, industry executives estimate the claim would reach a record-breaking $420 million and, in turn, make it harder — and more expensive — for other satellite operators to get insurance.
Because of the financial risk associated with insuring such an expensive satellite, ViaSat-3 is probably covered by several policies across different companies.
“No one single insurer wants to take the risk by itself,” said Denis Bensoussan, who heads the satellite insurance business for Beazley Insurance, a syndicate of Lloyd’s of London, one of the panel of insurers for ViaSat-3. No other major insurer was willing to publicly disclose its role as an underwriter of the satellite.
Viasat on Aug. 24 reported another stricken spacecraft, saying its Inmarsat-6 F2 satellite launched in February suffered a power problem. The failure may end the craft’s useful life and result in a $350 million insurance claim, Space Intel Report said.
Viasat’s troubles in orbit come a few years after big-name insurers like American International Group Inc. and Allianz SE have shuttered their space portfolios. That’s left a smaller pool of providers to absorb the risks in the notoriously high-stakes $553 million market.
While major telecommunication firms with multimillion-dollar satellites still desire coverage, other space operators focused on launching large batches of smaller satellites into low-Earth orbit — such as Musk’s Space Exploration Technologies Corp. — aren’t doing the same. To them, the loss of one satellite isn’t a major issue.
Viasat executives said it’s too early to speculate on whether it will file a claim.
“There’s no consequences to us taking another couple or three months to get good measurements and then making those decisions,” Viasat CEO Mark Dankberg told analysts Aug. 9 after the company posted better-than-expected quarterly results.
Investors are worried though. Shares in Viasat plunged 28% in a record single-day drop after its July announcement of the ViaSat-3 problem.
Executives said the satellite issue would curb growth in 2025, though the impact was limited to its fixed-broadband service, only about 13% of its business.
The company’s ViaSat-2 satellite launched in 2017 also experienced an antenna anomaly, triggering a $188 million claim, William Blair’s Louie
DiPalma told clients last month.
“This one hurts much worse though because the wait has been so long, and because Viasat has been experiencing pressure from SpaceX,” DiPalma said.
Following news of the Inmarsat-6 anomaly, Viasat and other industry participants “will likely experience significant challenges with obtaining insurance for future satellite launches,” DiPalma said in an Aug. 25 note.
When a massive satellite loss occurs, it’s often followed by a small exodus of players in the industry. As insurers leave, premiums tend to rise, according to industry experts.
In 2019, the total losses from satellite claims amounted to $788 million, which overwhelmed the total premiums for the year at $500 million, according to launch and satellite database Seradata. In the years that followed, big names like American International Group Inc., Swiss Re AG, and Allianz SE all closed the door on satellite insurance.
And if the pool of insurers shrinks, the remaining insurers will play it safer.
“People will be less keen to deploy capital on sort of risky, challenging satellites or challenging projects,” said Beazley’s Bensoussan. “Or they will demand more premium for that or they will restrict coverage.”