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Satellites and Solar Flares Among Emerging Risks

Originally posted September 9, 2013 by Anya Khalamayzer on https://www.propertycasualty360.com

Widespread panic due to solar flares and satellite collisions is no longer the stuff of science-fiction now that these risks have the potential to create prolonged business interruption and billions in insured losses.

What goes on in the sky can affect those on the ground, says a Guy Carpenter report on the reinsurance industry’s emerging exposures, and can disrupt entire communities and halt economic activity. With more satellites than ever in orbit, our reliance on them for global communications, broadcasting, air traffic control and weather forecasting makes the world a vulnerable place should anything disrupt their service.

“Space debris poses a serious risk to operational satellites,” says the report. “Indeed, debris amounts are increasing as objects continue to collide with one another, producing more fragments.”

According to the U.S. Strategic Command’s Space Surveillance Network, there are more than 20,000 objects greater than four inches in size orbiting Earth. Of these, only 1,000 are active satellites; the rest are abandoned rocket stages and pieces of satellites and fragments.

Tens of millions of smaller particles are currently orbiting at sufficient velocity to cause significant damage to operational satellites—which is what happened to Ecuadorian satellite Pegaso in May 2013 when it hit debris left by a Soviet rocket; to Russian research satellite BLITS in January 2013 when it collided with space debris; and to a U.S. commercial satellite in February 2009.

Two orbits hold particular risk to hosting sites of collision: the lower earth orbit (LEO) less than 1,243 miles from earth that houses space stations, government communications and earth observation satellites, and the geosynchronous orbit (GEO) more than 22,369 miles from earth that contains communications, broadcast and meteorological satellites.

“Despite end-of-life deorbiting strategies that now exist for the latest generation of satellites deployed in the LEO that involved a controlled re-entry into the Earth’s atmosphere, no sustained debris mitigation measures are in place to catch existing space junk and pull it out of orbit,” says the report, citing that catastrophic collisions will occur in the LEO at least every five to nine years over the next two centuries.

Swiss Re puts the total value of insured satellites in the LEO at around $1 billion, but expects it to increase as more private companies explore satellite imagery and mapping.

The majority of insured satellites are in the GEO because of the commercial communication, broadcasting and meteorological satellites deployed here, sharing space with 500 obsolete satellites, 200 rocket bodies and thousands of smaller fragments.

Perhaps the greatest space risk comes from the sun, whose temperamental conditions can affect the performance of technology on Earth.

Solar disturbances can flow through expensive conductive structures on the ground, disrupting electricity supply, causing satellite damage and triggering GPS signal disturbances to the tune of “billions or even trillions of dollars of losses.”

Lloyd’s of London estimates that a large solar disturbance could cut power to up to 40 million people along the Eastern U.S. seaboard with an economic cost of up to $2 trillion and losses of up to $30 billion for satellite operators.

According to Guy Carpenter, reinsurance options are available to cover risks during launch and orbit, as well as third-party liability for damage caused by the satellite or launch vehicle or for in-orbit collisions.

“While the cost of insuring a satellite during launch has traditionally been higher than its life in orbit, this is likely to change as underwriters become increasingly aware of increased collision risks,” says Guy Carpenter.

The best bet for interstellar risk-takers is to improve technical infrastructure, design early-warning systems for satellite collisions and solar flares and create improved space weather forecasts to soften the blow of whatever happens up there before its impact is felt on Earth.