Abstract
The concept of on-orbit servicing has been present in the space industry for a long time. Although the initial attempts were quite successful, they took place 20 years ago and in terms of commercial activity were followed by a long period of stagnation. Though, during that time technology has substantially developed, especially in terms of robotics, with subsequent tests demonstrating spectacular successes and growing technological readiness. Other circumstances have apparently changed as well, among them the massive production of space debris, rapid shrinking of the orbital slots as well as changes in the space business models requiring an ever more agile approach. All of these are not, however, solely within the circle of interest of the satellite operators. Just as involved are the regulators and the policy makers, and OOS becomes one of the tools for achieving the objectives of sustainable space development promoted at a global level. All of this also concerns the insurance industry, and it should come as no surprise that there is no space mission without financing, and no financing without insurance. It is well known that insurers have accompanied space ventures since the very beginning. Their special role is, however, not limited to supporting financial schemes. There can be no doubt that the insurance industry has a vital role to play in the risk management processes, as it initially developed the risk management concepts and tools that were subsequently applied in all the industries. This is also the case with on-orbit servicing. In effect, a very interesting feedback loop may appear, whereby on-orbit services and the insurance market give each other a synergic burst of new possibilities. The author intends to explore the way in which the new type of space activities and insurance interact, while also enhancing sustainable development at the same time. Nowadays, OOS seems to be an emerging concept also commercially, welcomed with much hope and enthusiasm from the side of the space industry as well as space-faring countries. The potential of this idea is huge, as it can resolve at least some of the many sensitive issues, space debris being one of the most important. No doubt it first of all requires reliable technology, but also the management and legal aspects should be treated with lots of attention. Bearing that in mind, this chapter will focus on the risk management and insurance aspects. Thus the chapter is not aimed at discussing the technical possibilities of on-orbit servicing, nor at providing a detailed risk assessment, but instead will focus on risk management, with special attention given to insurance.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
Notes
- 1.
These concerns the successful Skylab Mission, Telescope Hubble as well as the recovery of the Palapa B2 and Westar 6 satellites. Frontiers of space risks. Natural Cosmic Hazards and Societal Challenges, ed. R.J. Wilman, Ch. J. Newman. Francis & Taylor Group 2018, p. 179. On-Orbit Satellite Servicing Study. Project Report, NASA Goddard Space Flight Center, October 2010, p. 16.
- 2.
M. J. Losekamm, et al., Legal and Political Implications of Future On-Orbit Servicing Missions, 66th International Astronautical Congress, Jerusalem, Israel. Copyright c 2015 by the Space Generation Advisory Council; R. Parker, On-orbit servicing—an insurer’s perspective, Room 2/2015 (release 27.02.2015).
- 3.
J.P. Davis, J.P. Mayberry, J.P. Penn, On-orbit servicing: inspection, repair, refuel, upgrade, and assembly of satellites in space.
- 4.
S. A. Carioscia, B. A. Corbin, B. Lal, Roundtable Proceedings: Ways Forward for On-Orbit Servicing, Assembly, and Manufacturing (OSAM) of Spacecraft, 2018 Institute for Defense Analyses.
- 5.
The best example of a cooperative space object is the ISS; See also, for example, the project MEV (Vivisat by Orbital ATK and US Space; D. Benoussan, TeSeR—Technology for Sel-Removal of Spacecraft (Project under Horizon 2020 under grant agreement No. 687295), p. 13); J.P. Davis, J.P. Mayberry, J.P. Penn, On-orbit servicing: inspection, repair, refuel, upgrade, and assembly of satellites in space; On-Orbit Satellite Servicing Study. Project Report, NASA Goddard Space Flight Center, October 2010, p. 11.
- 6.
Ibid, p. 3; see also R. Reesman, Assurance through insurance and on-orbit servicing, The Aerospace Corporation 2018.
- 7.
P. Colmenarejo, M. Graziano, Towards Cost-Effective On-Orbit Servicing/ADR Using Modular and Standardized Approach, IAC-19-A6.10/B4.10 x 53000.
- 8.
W. Connley, Integrated Risk Management Approach within NASA Programs/Projects, https://ntrs.nasa.gov/search.jsp; J.S. Perera, L.B. Johnson, The Risk Management for the International Space Station, Proceedings of Joint ESA-NASA Space Flight Safety Conference, ESTEC, Noordwijk 2002.
- 9.
See also E. Baranoff, who gives a similar definition relating risk to the consequences of uncertainty, as well as E. Vaughn: E. Vaughn, Fundamentals of Risk and Insurance, John Wiley & Sons, Inc., 2008, p. 5; E. Baranoff, Enterprise and Individual Risk Management, Creative Commons 2012, p. 22 as well as D.M. Gerstein et al., Developing a Risk Assessment Methodology for the National Aeronautics and Space Administration, 2016, Library of Congress, p. 7.
- 10.
Blassel P., Space projects and the coverage of associated risks, The Geneva Papers on Risk and Insurance, Vol. 10, No. 35, 1985, p. 72—proposes another division, distinguishing separately: loss of property, damage to property, a failure to achieve the proper orbit, a partial or total failure of the satellite or payload and a loss of revenues. However, according to the author, the above division includes damage as well as the risk from the occurrence of which the damage results.
- 11.
In total, over 200 people have been killed by rocket explosions. Apart from the Challenger space shuttle, the majority of the accidents causing death occurred on the ground during the ground processing of the launch operation, or during re-entry; S.R. Jakhu, T. Sgobba, P.S. Dempsey (2011), The need for an integrated Regulatory Regime for Aviation and Space, p. 13.
- 12.
Ross S, Risk Management and Insurance industry perspective on cosmic hazards, in: Handbook of cosmic hazards and planetary defence, 2015, p. 2.
- 13.
For example, the launch activities as proposed by the UN “shall be defined as those activities undertaken to place or try to place a launch vehicle and any payload in a suborbital trajectory, in Earth orbit in outer space, or otherwise in outer space.”.
- 14.
Propellants are also used during the satellite operations stage, but in significantly lower quantities, which also lowers the probability of technology-related failures. That is also why the risk related with the use of propellant decreases along with the flight time and the consumption of the propellants; A. Soucek, International Law in: Outer Space in Society, Politics and Law, A. Soucek, Ch. Brunner, Springer Wien New York 2011, p. 338.
- 15.
In this respect, there are at least three types of radiation that are taken into account and which may vary, depending on the orbit. These are van Allen belts—captured by the Earth’s magnetic field, particles sent by the sun during solar storms and galactic cosmic rays; Kleiman J., Lamie J. K., Carminati M.-V., The law of spaceflight, A guidebook for new space lawyers, 2012, p. 20; Pelton J., Satellite communications, Springer Science & Business Media, Arlington 2011, p. 30.; also A. Soucek, International Law in: Outer Space in Society, Politics and Law, A. Soucek, Ch. Brunner, 2011, p. 337.
- 16.
M. Williamson, Commercial Space Risks, Spacecraft Insurance and the Fragile Frontier, in: Frontiers of space risks. Natural Cosmic Hazards and Societal Challenges, ed. R.J. Wilman, Ch. J. Newman. Francis & Taylor Group 2018, p. 149.
- 17.
M. Hapgood, Space weather, in: Frontiers of space risks. Natural Cosmic Hazards and Societal Challenges, ed. R.J. Wilman, Ch. J. Newman. Francis & Taylor Group 2018, pp. 38–49.
- 18.
ESA 2015, CLEANSAT: New satellite technologies for cleaner low orbits.
- 19.
This is known as the Kessler syndrome (space-asset destructive chain reaction) following the name of a NASA expert Donald Kessler, who in 1978 first discussed the potential of orbital debris becoming self-perpetuating. It was concluded that collisions of satellites and spent rocket bodies would eventually form the dominant source of orbital debris in LEO. It was predicted that debris from collisions would collide with other satellites and rocket bodies and create even more debris. As a result of this chain reaction, the risk to satellites in certain regions of space would increase exponentially over time, even without further launches into those regions. In a 1991 paper, Kessler used the term “collisional cascading” to describe this process. This has created the widely used term “Kessler syndrome”; see for example EU (2013) MEMO/13/149.
- 20.
C. Colombo, F. Letizia, M. Trisolini, H. Lewis, Space Debris, in: Frontiers of space risks. Natural Cosmic Hazards and Societal Challenges, ed. R.J. Wilman, Ch. J. Newman. Francis & Taylor Group 2018, pp. 112–120.
- 21.
On-Orbit Satellite Servicing Study. Project Report, NASA Goddard Space Flight Center, October 2010, p. 25.
- 22.
Risk management for the purposes of space projects is used in the meaning adopted by IAASS: “Risk management is a systematic and logical process to identify hazards and control the risks they pose.” One of the important reasons for adopting space law in general, is the authorisation of space activities, during which the states have a chance to verify the technical tools adopted by space entrepreneurs, and during the continuing supervision of space activities to check the application of the measures accepted at the authorisation stage.
- 23.
M. Laisne, Space Entrepreneurs: Business Strategy, Risk, Law and Policy in the Final Frontier, 46 J. Marshall Law Review 1039 (2013), Issue 4. H. Brettle, J. Forshaw, J. Auburn, C. Blackerby, N. Okada, Towards future Debris Removal Service: Evolution of an ADR Business Model, IAC-19, A6, 10-B4.
- 24.
The concept of second and third party risk reflects the potential liability to related (second) parties or (unrelated) third parties. The circle of ‘related parties’ is defined in a broad way and it includes the whole chain of contractors and subcontractors, where the main criterion is the involvement of an entity in the same space project. From this point of view, also the states are usually included in the notion of the second party, due to the ownership of the space port facilities, ownership of the space object to be launched into outer space, or simply by the international responsibility imposed by OST.
- 25.
The system of allocating risk in space activities requires applying the criteria of the entities involved in the launch operations, according to which there are first party, second party and third party risks. See also Mendes de Leon P., van Traa H., The practice of shared responsibility and Liability in Space Law, Amsterdam Center for International Law, Shares Research Paper 70, 2015, pp. 19–23, available at www.sharesproject.nl, accessed 18 August 2016.
- 26.
Looking only at the UKSA requirements on risk assessment of quantitative and qualitative nature, where the technical and risk mitigation requirements are explained in detail: https://www.gov.uk/guidance/apply-for-a-license-under-the-outer-space-act-1986, accessed on 7 March 2020; see also T. Harris, K. Memon, G. Glasgow, In-orbit risk assessment in the era of New Space, First International Orbital Debris Conference 2019.
- 27.
M. J. Losekamm, et al., Legal and Political Implications of Future On-Orbit Servicing Missions, 66th International Astronautical Congress, Jerusalem, Israel. Copyright c 2015 by the Space Generation Advisory Council.
- 28.
M. J. Losekamm, et al., Legal and Political Implications of Future On-Orbit Servicing Missions, 66th International Astronautical Congress, Jerusalem, Israel. Copyright c 2015 by the Space Generation Advisory Council. C. Santos, M. Rhimbassen, On Orbit Servicing as Space Resource. Liability Challenges, http://chaire-sirius.eu/wp-content/uploads/2018/11/ppt-6-nov-OOS-liability.pdf, ast access 28 February 2020
- 29.
Which in turn are activities that are inherently and strictly related to the environment of outer space in a functional approach, i.e. which are conducted after leaving the ground with the aim of reaching a level of space not reachable by conventional aircraft.
- 30.
Dempsey P. S., National Laws Governing Commercial Space Activities: Legislation, Regulation, & Enforcement, in Northwestern Journal of International Law & Business, vol. 36, 2016, p. 19.
- 31.
See more on the ‘compensatory logic and preventive logic’ of the liability for environmental damages—the view expressed in the ICJ Judgement Hungary v Slovakia, CJ Reports 1997, 78, para 140 in: W. Munders, Active Debris Removal, International Environmental law and the Collective Management of Risk: Foundations of an International System for Space Traffic Management, Working Paper No. 200—April 2018.
- 32.
Kerrest A., UN Treaties on outer space, L.C. and licensing regimes, in: Actions at national level, UN Korea Workshop, pp. 236–249.
- 33.
A similar context of second party risks was presented by Prof T. Tanja Masson-Zwaan—Liability & insurance in air & space law; Regulation of suborbital flights in Europe—ICAO/UNOOSA Aerospace Symposium, Montreal Canada, 18–20 March 2015.
- 34.
Hermida, J., Commercial Space Launch Services Contracts in France and the United States of America, Rev. dr. unif. 2004-3, p. 541.
- 35.
See also Kayser V., Launching Space Objects: Issues of Liability and Future Prospects, in Space Regulations Library, vol. 1, Kluwer Academic Publishers, New York, Boston, Dordrecht, London, Moscow 2001, pp. 7–8.
- 36.
Beer T, Launch services agreements—anything new, Launch services agreement, in: Project 2001, Legal Framework for the Commercial Use of Outer Space: Karl-Heinz Böckstiegel (Ed.); Carl Heymans Verlag, Cologne, 2002, p. 129.
- 37.
W. Connley, Integrated Risk Management Approach within NASA Programs/Projects, https://ntrs.nasa.gov/search.jsp; More on risk-informed decision making—D. M. Gerstein et al., Developing a Risk Assessment Methodology for the National Aeronautics and Space Administration, 2016, Library of Congress, pp. 15 and 58 et subsq.
- 38.
This function of insurance is not specific in the space industry but in many others innovative ventures. M. Laisne, Space Entrepreneurs: Business Strategy, Risk, Law and Policy in the Final Frontier, 46 J. Marshall Law Review 1039 (2013), Issue 4.
- 39.
K. Malinowska, Space Insurance. International Legal Aspects, Kluwer 2017, p. 287. AON, Space Q1 2020 market report.
- 40.
Meredith P., Space insurance Law—with a Special Focus on Satellite Launch and In-Orbit Policies—the Air & Space Lawyer Volume 21, No. 4, 2008; Diederiks-Verschoor I.H.P., Financing and insurance aspects of spacecraft, J.S.L vol. 24, Nos. 1 & 2, 1996, p. 99 et seq.
- 41.
Insurance coverage constitutes a third cost of the space project; Harrington A. J., Legal and Regulatory Challenges to Leveraging Insurance for Commercial Space—31st Space Symposium, Technical Track, Colorado Springs, Colorado, United States of America Presented on 13–14 April 2015; Sundahl, M., Financing Space Ventures in: Handbook of space law, 2015, p. 875.
- 42.
The first space insurance contract was concluded in 1965 for COMSAT’s Early Bird satellite with coverage of pre-launch insurance and third party liability insurance, written by marine insurers; The coverage of launch and in-orbit risks began in 1968 with insuring an Intelsat fleet of satellites; See Iridium report of 2015 and Catalano Sgrosso G., Insurance Implications About Commercial and Industrial Activities in Outer Space—Citation: 36 Proc. On L. Outer Space 187, 1993, p. 192. Reeth van G., Space and Insurance, International Business Law, vol. 12, 1984, p. 127; B. Pagnanelli, Tracking take-off of space insurance, 2007; www.pagnanellirs.com/downloads/id281107.pdf, accessed 27 August 2016; Kuskuvelis I.I., The space risk and commercial space insurance, Space Policy, May 1993—different (stated that it covered also launch insurance).
- 43.
See appendix 1 to the Solvency II Directive, 2009/138/EC.
- 44.
Catalano Sgrosso, G., International Space Law, 2011, p. 500.
- 45.
i.e. When the limits of at least two of the following criteria are exceeded: a balance-sheet total of EUR 6.2 million; a net turnover, within the meaning of Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies, of EUR 12.8 million; an average number of 250 employees during financial year. More about the criteria of large risks, Kropka M., Kolizyjnoprawna regulacja umowy ubezpieczenia w rozporządzeniu Rzym I, 2010, pp. 128–139.
- 46.
For example, R. Parker, On-orbit satellite servicing—an insurer’s perspective, Room 2/27/15.
- 47.
E. Baranoff, Enterprise and Individual Risk Management, Creative Commons 2012, p. 148, Frontiers of space risks. Natural Cosmic Hazards and Societal Challenges, ed. R.J. Wilman, Ch. J. Newman. Francis & Taylor Group 2018, pp. 28 and 148. D.M. Gerstein et al., Developing a Risk Assessment Methodology for the National Aeronautics and Space Administration, 2016, Library of Congress, p. 58 et subsq.
- 48.
Frontiers of space risks. Natural Cosmic Hazards and Societal Challenges, ed. R.J. Wilman, Ch. J. Newman. Francis & Taylor Group 2018, pp. 68 and 147. C. Preyssl, R. Atkins, T. Deak, Risk Management at ESA, ESA Bulletin no. 97, March 1999.
- 49.
Ibid.
- 50.
R. Parker, On-orbit satellite servicing—an insurer’s perspective, Room 2/27/15.
- 51.
J. Schmidt, On-orbit Satellite Servicing—Insurance Considerations, Second International Workshop on Orbit-Servicing NASA’s Goddard Space Flight Center, May 2012.
- 52.
Traditionally, these factors include the complexity of market conditions and purely technical risk factors and among them spacecraft configuration, performance margins, track record (as well as launch vehicle track record), the insured’s history. See more in AON ISB Space Insurance Fundamentals; Part I Introduction to Space Risks Management.
- 53.
Ibid. Space insurers distinguish several points in the space mission that are important from the risk assessment point of view. These are the intentional ignition, lift off, ascend phase and injection, satellite separation, deployment of solar panels and antennas, satellite orbit raising, satellite in-orbit testing and finally the satellite acceptance. Though only the last ones happen in orbit, there is no doubt that, unless there is a total loss during a failed launch, it seems like OOS may become a remedy for partial failures and the majority of early stage problems, from the moment the satellite is placed in orbit, even if in the incorrect one.
- 54.
e.g. Blassel P., Space projects and the coverage of associated risks, The Geneva Papers on Risk and Insurance, Vol. 10, No. 35, 1985, p. 64 “assessment of the risk of correct satellite operation over a given period of time is a complex matter, which does not lend itself exclusively to a mathematical or statistical analysis.” Meredith, P., Robinson G., Space Law: A Case Study for the Practitioner: Implementing a Telecommunications Satellite Business Concept, Amsterdam: Martinus Nijhoff Publishers, 1992, p. 337; the individualistic approach is adopted in the case of atypical risks, where assets are of high value, for example in vessels on the high sea, Williams C.A. et al., Risk Management and Insurance, 2002, p. 158; Ronka-Chmielowiec W., Ubezpieczenia Rynek i Ryzyko, Polskie Wydawnictwo Ekonomiczne, 2002, p. 172.
- 55.
Kuskuvelis I.I., The space risk and commercial space insurance, Space Policy, May 1993, p. 111. Another factor making the underwriting endeavour difficult is limited access to data on space projects that were not insured, which may not have any direct influence on rates on the space insurance market, but does further limit the database for developing meaningful statistics. Finally, national statutory impediments are imposed on the transfer of data concerning space assets, the best known of which is ITAR, binding in the US. Its provisions require insurers from outside the US to obtain a licence in order to be able to see data necessary for the risk assessment, since it is recognised as an export of technical data. See also Whearty R., Intro to Space Insurance. First party—Marsh Space Projects a History of Leadership and innovation August 2015; Bender R.G., International Arbitration—Satellite Communications: Arbitrator Perspective in: International Commercial Arbitration Practice: 21st Century Perspectives, LexisNexis, 2010.
- 56.
Kowalewski E., Prawo ubezpieczeń gospodarczych, Branta 2006, p. 41 (where it is emphasised that the insurable risk should be measured by statistical methods; risk measured only with probability methods is uninsurable and the risk measured by estimations is conditionally insurable); also Kwiecień I., Ubezpieczenie w zarządzaniu ryzykiem działalności gospodarczej, C.H Beck, Warszawa 2010, p. 125. Kunstadter C., Space insurance market overview, AIAA Workshop, 2013; Space insurance market overview, Masson-Zwaan T., Liability & Insurance in Air & Space Law; Regulation of Suborbital Flights in Europe, Montreal, 18 March 2015, ICAO/UNOOSA Aerospace Symposium.
- 57.
The pre-launch coverage, until lift off, is often provided not by the space insurers, but by the cargo, marine and other insurers. This is due to the fact that all the risks related to the ground activity, even if connected with outer space have much more in common with other insurance of ultra-hazardous activities, and as such are more similar in dealing with such risks (as in the nuclear and chemical industries). Space insurance starts with the lift off of the launch vehicle and may last for the duration of the satellite’s life. Kunstadter C., Space insurance market overview, AIAA Workshop, 2013; D. Rora, In orbit Servicing Insurance Aspects, World Risk Forum—Dubai 2010.
- 58.
R. Gubby, D. Wade, D. Hoffer, Preparing for the worst: The Space Insurance Market’s Realistic Scenarios, New Space 2016, Vol. 4, No. 2, D. Benoussan, TeSeR—Technology for Sel-Removal of Spacecraft (Project under Horizon 2020 under grant agreement No. 687295), p. 5.
- 59.
The launch phase lasts no longer than one hour (depending on the type of the launch vehicle and intended orbit), the early in-orbit phase (depending on the type of the satellite may last from several weeks up to several months in the case of all-electric satellites) and the operational stage may exceed 15 years.
- 60.
Pre-launch period (including manufacturing, testing and transportation phase, as well as the preparatory actions at the launch site), though included commonly to space insurance in a broad meaning, in fact is insured by insurers specialising in more general types of insurance, e.g. transportation, marine, or large corporations with a substantial capacity (e.g. AXA or Munich Re) based on the rules specific to all other branches of industry, even if taking into account their ultra-hazardous nature; Schöffski O., Wegener A.G., Risk Management and Insurance Solutions for Space and Satellites Projects, 24 The Geneva Papers on Risk and Insurance, 1999, p. 205.
- 61.
Masson-Zwaan T., Liability & Insurance in Air & Space Law; Regulation of Suborbital Flights in Europe, Montreal, 18 March 2015, ICAO/UNOOSA Aerospace Symposium; the second parties explicitly excluded from the ‘space liability regime’ (i.e. astronauts, passengers, etc.).
- 62.
Horl K. U., Legal Aspects of Risks Involved in Commercial Space Activities, Montreal 2003, p. 152.
- 63.
See, for example, Gerhard M., Schrogl K-U, Report of the Project 2001 Working Group on National Space Legislation, in: Project 2001 Legal Framework for the Commercial Use of Outer Space: Karl-Heinz Böckstiegel (Ed.), p. 557; and Sophia model law.
- 64.
See, for example, also the Polish draft space law. One of the drafts, i.e. the Sofia model law on space insurance, also includes proposed provisions on liability and compulsory liability insurance.
- 65.
K. Malinowska, Space Insurance, p. 287.
- 66.
See more, K. Malinowska, Space insurance, p. 311.
- 67.
That was already applied when the first OOS mission in the 1980s took place, allowing insurers to generate dome profits after restoring the service of the satellite Orion 3, placed primarily in an incorrect orbit. See: R. Parker, On-orbit satellite servicing—an insurer’s perspective, Room 2/27/15. See more K. Malinowska, Space insurance, pp. 377–380; On-Orbit Satellite Servicing Study. Project Report, NASA Goddard Space Flight Center, October 2010, p. 80.
- 68.
D. Rora, In orbit Servicing Insurance Aspects, World Risk Forum—Dubai 2010.
- 69.
S. A. Carioscia, B. A. Corbin, B. Lal, Roundtable Proceedings: Ways Forward for On-Orbit Servicing, Assembly, and Manufacturing (OSAM) of Spacecraft, 2018 Institute for Defense Analyses.
- 70.
D. Rora, In Orbit Servicing Insurance Aspects, World Risk Forum—Dubai 2010.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2020 The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
Malinowska, K. (2020). Risk Management and Insurance of On-Orbit Servicing. In: Froehlich, A. (eds) On-Orbit Servicing: Next Generation of Space Activities. Studies in Space Policy, vol 26. Springer, Cham. https://doi.org/10.1007/978-3-030-51559-1_2
Download citation
DOI: https://doi.org/10.1007/978-3-030-51559-1_2
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-51558-4
Online ISBN: 978-3-030-51559-1
eBook Packages: Social SciencesSocial Sciences (R0)