Space insurance underwriters are facing the prospect of yet another loss with the failure of a Kazakhstan communications satellite in orbit, The Insurance Insider revealed last week.
In-orbit cover on the Russian-built craft – valued at $53mn – is thought to have been placed in the market by Aon, with Catlin taking a significant line on the programme.
The KazSat-1 satellite, which is used to broadcast the former Soviet state’s national TV network, stopped transmitting on the 8 June after on-board failure.
The head of the Kazakh national space communications centre indicated radiation or solar ray damage may have led to a failure in the satellite’s onboard digital computing system, adding that management of the craft has been handed to the Russian Space Communications Company (RSCC).
According to underwriting sources, the in-orbit risk was declined by some markets who were unable to give a technical rate as a result of the satellite’s manufacturer, Khrunichev, having a limited track record, with KazSat-1 thought to be its first commercial build.
The cover is understood to have been priced at a relatively high rate-on-line for in-orbit insurance of 3.13.
KazSat-1 – part of Kazakhstan’s nascent space communications programme under an intergovernmental agreement with the Russian Federation – was launched on a Proton-K vehicle in June 2006.
Proton-K launch vehicles are themselves manufactured by Krunichev, and operated by International Launch Services, a joint venture between the Russian company and US giant Lockheed Martin.
Meanwhile, contrary to recent reports, RSCC’s Express-AM22 is still operating after technicians successfully patched an algorithm into its software that is understood to have corrected a gyro fault on the satellite.
The news will be welcomed by insurers, with the action thought to have avoided a total loss on the $80mn-valued craft, and potentially averted any claim on the cover.
It had previously been reported that the Willis placed programme – which also included Catlin with a significant line – may face a constructive total loss, or at least a partial claim.
Nevertheless, the KazSat-1 loss is the latest in a series of losses to hit the sector in 2007 and the first half of 2008.
This year, May’s expected partial loss on $100mn valued Marsh-brokered Nigerian satellite NIGCOMSAT-1 followed the loss of SES Americom’s $192mn AMC-14 craft in March – with cover also placed by Marsh – which was deposited in an unusable orbit following the failure of the Proton rocket delivering it into space.
In 2007, meanwhile, estimated launch and in-orbit premium of $660mn was decimated by projected total claims of $835mn.
As previously reported in The Insurance Insider, broker Aon has suggested space insurers are targeting premium increases of up to 30 percent to right the deficit.