31 March 2014 Insurance

Munich Re launches new satellite product

Munich Re has launched an innovative product designed for commercial satellite operators covering a satellite's entire service life.

The insurance, which is referred to as end-of-life cover, commences with a satellite's launch and terminates at the end of its scheduled service life, or after 15 years at most. Worldwide, some 25 commercial satellites are launched every year.

In addition to the policy’s long duration, the company said the policy is also innovative in that during that period no adjustment is made to the conditions of insurance, even if the satellite's technical condition has changed.

“Our new end-of-life cover gives clients planning security with regard to their insurance costs and scope of cover for the satellite's entire useful life,” said Thomas Blunck, a member of Munich Re's board of management and whose responsibilities include space business.

Blunck noted that most satellites are funded by long-term debt meaning that the availability of insurance coverage plays a decisive role in whether a satellite project can be financed and at what cost. “Our product therefore provides clients with clear added value,” said Blunck.

A satellite usually has an asset value in the range of $200–400 million and a service life of 15 years in orbit. The insurance covers this value, i.e. the cost of acquisition, launch, financing and insurance. The limit of indemnity for an individual satellite, and thus the indemnity payable in the event of loss, decreases over a satellite's lifetime, in line with its depreciation in value.

Up to now, standard covers have comprised launch insurance, which commences with a satellite's launching and has a term of up to one year, followed by in-orbit insurance, which as a rule is renewed annually. Prior to renewal, the satellite's technical condition is verified and any adjustments to the scope of cover and/or price are made.

Munich Re has an extensive database on satellite launches and in-orbit risks during the past 50 years. This enables Munich Re to assess risks well and offer lifetime insurance cover for satellites with a technology that has proved reliable over an extended period of time.

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