Risk Adviser
Ready for Takeoff
Insurers need to get on board with the growing space tourism industry.
One late evening two gentlemen, who had been visiting numerous local drinking establishments, were sitting on a bench talking. Looking into the night sky one man said to the other, “Which do you think is farther away Florida or the moon?” The other turns and says, “Hellooooooo. Can you see Florida?” Or so the story goes.
We have been told for years that one day private citizens will travel to space or to the moon. Due to the rapid increase and developments in technology and manufacturing, the potential for everyday citizens to experience space travel is more than just a future away, it is a reality. The Russian Federal Space Agency was the first to offer citizens the opportunity to travel into space. Through the Russian program, individuals can fly into space and spend time on the International Space Station at a cost of more than US$10 million for the experience. Seven individuals paid the price. In June, the National Aeronautics and Space Administration revealed it is planning to permit “private astronauts” to go into space and board the ISS at a yet to be confirmed more reasonable admission price per day.
There are more than 20 private nongovernmental companies that are working to create a suborbital tourist space trip in which passengers would have several minutes of weightlessness, see numerous star fields, have various constellations pointed out and see a portion of the Earth from above. These companies are developing this “for-profit” adventure at a probable cost of between US$200,000 and US$300,000 per person, per trip. Affordable space tourism is not only coming, but is here.
As this commerce gains traction what about the emerging risks, insurance and the inherent claims of space travel? From an underwriting standpoint, how would this type of activity be rated? What actuarial or risk modeling would be relevant to help insurance carriers set a premium? Would current life insurance policies need to carry “space tourism” exclusions? Would business travel accident policies provide coverage as the trip is “outside” of the United States? Does cancellation coverage apply? Would the private space flight operators offer life insurance policies right before lift-off?
In addition, how would claims be processed? What legal standings would set precedent? There are almost no laws related to space tourism personal loss. In 2010, the New Mexico state legislature passed the Spaceflight Informed Consent Act. This law affords legal protection to private companies who offer space flights partial immunity in the case of injury or death to passengers on the flights. Consent waivers must be signed by all passengers stating that the companies cannot be held liable in the “death of a participant resulting from the inherent risks of space flight activities.” There is a section that does allow claims to be brought in the case of “gross negligence or willful misconduct.” There are limited U.S. federal regulations related to space tourism and private space flight and in some cases these are merely recommendations or proposed guidelines.
From a risk management perspective issues such as training, passenger risk control, security, cyberhacking, compliance, governance, reputation risk and insurance will all be top of mind.
UBS Group AG predicts that space travel and tourism will be a US$23 billion business in 10 years. With the space flight and tourism industry ready to take off, the insurance and risk community are still facing the unexplored and the unknown. We need to get on board soon.
Best’s Review columnist Lance Ewing is executive vice president of Global Risk Management for Cotton Holdings Inc. He also is the former president of the Risk and Insurance Management Society. He can be reached at bestreviewcomment@ambest.com.
