Surplus Lines news Briefing:
a round-Up of recent e&S headlines
Space Liability: Low Occurrence,
High Severity, Little Coverage
By Mark Ruquet
You’ve probably been looking skyward over the past few weeks— first, you were on the
lookout for a U.S. satellite (which
recently fell harmlessly into the
Pacific). And now the Germans are
saying one of their satellites will fall
next month.
The question for the Germans
is the same as it was for U.S. officials—where will it fall? It is next to
impossible to predict.
That unpredictability of risk is
not lost on insurers, as questions
are raised about whether space
risk is insurable and if the industry
should create products for those
risks.
Jan Schmidt, a director in
Swiss Re’s aviation and space team,
says that when it comes to falling debris from the breakup of a
satellite as it re-enters the earth’s
atmosphere, insurers are not on the
hook for any losses that may occur.
Typically, insurers write coverage for launch of the vehicles. One
part of the policy covers the hull value and
contents. The second
part is liability coverage for any damage a
failed rocket may produce during the first
few minutes of the
launch phase. Aside
from that, insurers are
not writing coverage.
Government and
military satellites do
not have insurance,
says Schmidt, so any liability associated with those vehicles would be
the responsibility of the state that
launched it.
However, private companies
need to protect themselves from
liability exposure, and they are the
purchasers of space insurance.
For the U.S. satellite that fell
harmlessly to earth a few weeks ago
“it was clear who it belonged to and
“The risk of some- one getting hit is very, very remote,”
he says. “ninety-nine
point nine percent of
the satellites don’t
make it back to
earth.”
it was easy to trace,” says Schmidt.
However, if the debris is not
tracked closely it is
difficult to impossible
to know where it
originated from due
to the severe damage
the debris sustains on
reentry.
“When it is damaged it is very, very
difficult to assess
fault,” says Schmidt.
The good thing
is most of the satellite does not survive
reentry, and the risk of serious damage is further reduced, Schmidt says,
because there is more ocean than
land mass for these objects to fall
into.
“The risk of someone getting
hit is very, very remote,” he says.
“Ninety-nine point nine percent of
the satellites don’t make it back to
earth.”
However, the risk of satel-
Jan Schmidt, director, Swiss
Re’s aviation and space team
lites colliding with space debris is
another issue, and Swiss Re raised
the issue in a report earlier this
year.
There is a significant amount
of space debris that potentially lies
in the path of existing satellites and
could do damage. The report notes
that there are 16,000 identified
space objects and less than 1,000
are operational satellites.
Schmidt says the report raises
the question of responsibility and
liability if a vehicle is damaged
in space by debris or a disabled
satellite.
The report says insurers cannot “respond to the challenge
space debris poses to their insured
operators.” Instead, the “
pragmatic approach” is insurers and
insureds should work together to
promote risk-mitigation efforts.
This includes developing legal
certainty over the issue of liability
and collaborating with scientists “to
address this daunting issue.” J
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Movie Producer, Insurer Settle Lawsuit
Over “Expendables” Delays
By Chad Hemenway
A settlement has been reached between a movie-production company and an insur-er over filming delays during “The
Expendables” involving stars Jason
Statham and Sylvester Stallone.
Alta Vista Productions filed a
lawsuit in Louisiana federal court
more than a year ago alleging St.
Paul Fire & Marine Insurance
breached contracts that Alta Vista
obtained to cover losses incurred
due to delays in production of the
movie—delays that were due to
medical conditions suffered by
Statham and Stallone.
St. Paul Fire & Marine issued a
“motion picture production pack-
age” insurance policy to Alta Vista,
according to court records.
delayed production on two occa-
sions due to a growth on his vocal
cord found after he underwent a
medical exam
as part of the
insurer’s review
to write the
coverage. The
growth had to
be removed
and follow-up
treatments were
required.
Production
of the movie
was delayed at its two locations—
Rio De Janeiro, Brazil and New
Orleans, La.
Stallone suffered an ankle
alta Vista Productions filed a lawsuit in Louisiana federal court more than a year
ago alleging St. Paul Fire & Marine insurance
breached contracts that alta Vista obtained
to cover losses incurred due to delays in production of the movie—delays that were due
to medical conditions suffered by Statham
and Stallone.
Terms of the settlement were
not disclosed in court documents.
According to the lawsuit,
Statham had to miss time and
injury while filming “The
Expendables,” which also starred
Jet Li, Mickey Rourke and Dolph
Lundgren.
