Risk Assessment in Insuring Space Endeavours: A Legal Approach

Abstract

Risk assessment is part of the underwriting process in any type of insurance, but space insurance has peculiarities requiring a specific approach: the technical nature of space risks, the inability to apply the ‘law of large numbers’ and the time between risk assessment and risk attachment. It also requires special expertise from space insurers concerning space technology and the related risks. Insurers have to take an individual approach to projects, and the risk assessment process by the space licensing authorities is of invaluable importance and help for insurance underwriting. Information on space projects from the space operator is of critical value for the insurance underwriting and the licensing processes. However, the third party liability risk is the main interest for the licensing authorities, while the space insurance market remains about first party insurance. From an insurance law point of view, the transfer of information between insurers and space operators reflects one of the basic insurance principles – ‘utmost good faith’. It seems that this tendency, visible both in civil and common law systems, has led to the standardization of contractual clauses in space insurance contracts, despite insurance coverage being tailored to a project. This article gives a legal perspective of risk assessment in space insurance, looking at the interaction between space law and insurance law, with interesting results for space insurance contracts and the established principles of insurance in risk assessment.