Briefing: Where we’re going, we’ll need more space insurance

AI? Whatever. It’ll be passé soon enough. Look up. Space. The final frontier. Over the next few decades, the human economy will expand into orbit and beyond at speed.

Right now, metaphorically, Columbus doesn’t even have a ship – never mind barrels, stores or crew.

Yet this coming space boom offers a rare opportunity for insurance – not just new risks to underwrite, but a chance to meet the ambitions of the Mansion House Compact itself. We should follow the breadcrumbs. 

Space is back. And it comes with risk – something the UK market excels at handling.

Beyond the now-mature launch market, space-based sectors are multiplying fast. Data constellations like Starlink already crowd the sky with satellites, bringing cyber, property and collision risk.

Then there’s space tourism. For just one example of a risk, Nasa has raised “urgent” questions around fertility in space.

What tourist expects to return from a trip with a reduced chance of becoming a parent? How would we even insure that? The long tail of this risk is almost evolutionary. Expect space travel and life insurance, orbital professional indemnity, astro-cyber and a wide array of casualty risks.

That’s a lot of premium over time.

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Space congestion may be the most immediate consequence of the boom. Former London Lord Mayor Michael Mainelli spoke openly about orbital debris and the opportunity it presents UK risk markets.

During his tenure, the Space Protection Initiative highlighted that 65% of catalogued orbital objects result from breakups of other hardware. Scientists estimate around 29,000 objects larger than 10cm, 670,000 larger than 1cm and more than 170 million over 1mm. The sheer amount of rubbish orbiting the globe is staggering. 

And as the economic endeavour into space accelerates, international relations will follow. Space debris and the potential for it to block off-world expansion are a strategic priority for the world’s leading states and the sector should treat it as such too.

Insurance could be the tool to make these priorities manageable. Without insurance, the British Empire would likely have stalled. In a perfect world, empires wouldn’t exist. But, objectively, insurance enabled entrepreneurs to finance fleets, absorb losses and take risk. At the time, it was an undeniable, genuine competitive advantage on the world stage.

Those ventures displaced others and the insurance sector’s role in that period of colonisation is ethically unavoidable.

But space offers no such moral brick wall. It presents, for the first time, the prospect of victimless economic expansion – assuming we don’t decide space bacteria deserve the same protections as whales.

Ironically, modern space exploration increasingly resembles the early colonial age of privateers. Corporations, often under government contract, are taking humanity outward, much as they once took Europeans out across the globe.

Economic opportunities

Historically, this sort of expansion is always about resources. And, even beyond helium-3 on the moon, space is rich in the materials our modern economy increasingly demands.

Take Ceres, a dwarf planet in our solar system thought to be made up of 25% water. Given water’s importance, this rock may one day be the Suez Canal of space. 

Then there’s 1986 DA, an asteroid so dense with metals it could exceed the world’s known cobalt reserves – a resource critical for batteries and currently extracted by a terrestrial mining sector already fraught with moral complexity, as mass casualty disasters in Congo have shown.

Capitalists are ahead of the curve on these gigantic resource opportunities.

Love or loathe him, one entrepreneur embodies the modern space privateer most of all – Elon Musk. He has data satellites, humanoid robots and a reusable rocket designed to slash cost per tonne to orbit – unlocking whole new arcs of space industry.

Close behind are Blue Origin and a host of national programmes. Europe, undeniably, is behind.

The UK isn’t blind to the opportunity. A government-backed programme reached orbit with Black Arrow between 1969 and 1971 – and then stopped. Today we have spaceports, but no rockets.

Virgin Orbit collapsed in 2023. Reaction Engines followed. Orbex, a rare rocket startup, currently faces takeover following bankruptcy and disputes over withheld government funding. Are we really taking the future seriously in the UK?

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Despite a number of failures, the future is not entirely bleak for the UK. Surrey, Buckinghamshire and Oxfordshire host thriving space clusters. British firms build satellites, boosters and probes. Ambition abounds!

Bristol-based Space Forge is even putting advanced chip manufacturing into orbit. One British scientist known to this writer is designing a space station – possibly ignoring my suggestion to base it on ELO’s Out of the Blue artwork.

Once a station is in orbit, however, jurisdiction becomes murky. There’s no national sovereignty in space, yet the UK state remains liable for incidents or debris. This creates a grey zone between government contingent liability and private insurance – exactly where the sector needs to be on its public affairs A-game. 

Complexity will deepen as military interests follow economic growth. Where there are resources, ownership and protection follow. Sci-fi? Perhaps. But it’s happening. Space is governed by the Outer Space Treaty of 1967 – already showing its age, especially in a more volatile world order.

Great-power competition is back. Last time we had Sputnik, moon landings and Reagan’s Star Wars, but the hangover and lull won’t last.

In his first term as president, Donald Trump sent a surefire message to the world that space was serious business by inaugurating the US military’s newest arm – the US Space Force.

Trump isn’t alone either. China recently unveiled the Luanniao – a 120,000-tonne near-space flying aircraft carrier. Announcements like this are partly theatre, but they underline how close this epoch is. Space is no longer niche. It’s a serious, contested domain. It is economic growth for the next 500 years. 

So how does this align with UK policy? The Mansion House Compact, a 2023 voluntary agreement where major UK defined contribution pension providers committed to allocating at least 5% of their default funds to unlisted equities, could give the sector a basis to make the space economy a strategic investment focus.

This isn’t just about derivative premium growth – some of the companies involved in space will generate value on a scale never before seen. But the compact has just 11 signatories and it hasn’t yet aligned with wider regulatory capital obligations.

More takeup matters and the system could also help brokers invest directly across streams, too, unlocking even more capital.

But one thing is certain – the UK insurance market could propel the British space industry to the fore. Will we fire up those boosters, or let others take the prize while we merely insure them?

Industry, engage!