On 9 July, Europe’s new heavy-lift rocket, Ariane 6, made a successful maiden flight from the French Guiana spaceport. This is great news for the international space industry – and the space insurance market.
Historically, around 30 percent of maiden launches have ended in failure, so this early success provides a major boost to Europe’s space industry. If this level of reliability can be continued in subsequent missions, Ariane 6 could match the high standards of its predecessors, Ariane 4, and Ariane 5.
This is important not only for Europe but also the global space industry: it offers much needed competition to SpaceX, which has essentially had the commercial heavy launch sector to itself in recent years. This is not to say that SpaceX hasn’t earned its position as the ‘go-to’ launch provider, but a virtual monopoly is never good for business in the long term.
Furthermore, a successful inaugural mission for a heavy-lift launcher is good news for the space insurance sector, and the team at Lockton Space welcomes the diversity within the launch vehicle market that this restores. This is particularly important given the partial failure of a Falcon 9 mission - its first in almost nine years - in the same week as the Ariane 6 launch.
In its day, Ariane 5 was one of the most highly regarded launch vehicles, because of its overall reliability. A satellite launched on this vehicle could command extremely competitive insurance rates. Although these premium rates were not particularly attractive to underwriters, this high-reliability performance provided them with a regular income stream and the market achieved a reasonable level of stability and profitability.
Since then, the satellite launch market has changed substantially. Firstly, Russia’s invasion of Ukraine effectively removed Russian launch vehicles from the commercial insurance market. Secondly, the reusability of SpaceX’s Falcon 9 rocket provided a paradigm shift in the launch industry and a challenge for remaining competitors.
Furthermore, the insurance underwriting environment deteriorated in 2023. Space insurance claims increased significantly, dominated by two high profile, post separation issues for Viasat-3 F1 and Inmarsat 6-F2. For underwriters this meant that claims dramatically exceeded premium income in 2023, resulting in some insurers either reducing their capacity or withdrawing from the sector entirely. The issues are clear, but Lockton Space, as a new bespoke space insurance broker, has a highly qualified team that is more than ready to meet the challenge.
Despite the encouraging success of the first Ariane 6 mission, statistics show that no launch vehicle can be 100 percent reliable. Although some vehicles are more reliable than others, the startling fact is that failure rates for the first 10 launches across all orbit-class vehicles hover around 10 percent. Therefore, insurance will always be required, both as a risk mitigation factor for satellite operators and as reassurance for financial institutions. Space is a difficult business and insurance is part of the solution.
But let’s not rain on Ariane’s parade! As of July 2024, the global space industry has a new heavy-lift launch vehicle. Lockton Space congratulates Arianespace on the successful Ariane 6 launch and looks forward to its continued success.
For further information, please contact the author, or your local Lockton representative.
