Insurance as Governance for Outer Space Activities

Abstract

ABSTRACT Despite sixty-plus years of technological development, space activities are still ultra-hazardous in nature. These activities range from essential to modern life, like telecommunications, to futuristic and forward thinking, such as space tourism. In order for these activities to not only continue but also develop and grow, their inherent risk must be managed. Political will is lacking at an international level to create new binding rules for activities in space. Likewise, states are reluctant to unilaterally impose stricter, even if ultimately beneficial, regulations on their entities for fear that their domestic industries will flee abroad to greener pastures, creating a regulatory prisoner’s dilemma. States also usually require certain levels of insurance and indemnification to protect themselves against potentially costly mishaps. Likewise, banks and investors will often require insurance to protect their investments, as space business tends to be costly. Thus, a disproportionate amount of responsibility and authority can be transferred to a small number of global space insurers. They may be uniquely positioned to enforce, or at least promote, mechanisms to increase safety and sustainability in the commercial space industry. Increasing safety and sustainability in outer space may help to keep insurance premium costs from growing out of control for these hazardous activities. This article analyzes the sociolegal literature on risk and insurance as governance and applies these concepts to the space sector, considering the possibility that space insurers have become de facto regulators in space and exploring the implications of that possibility.