Billion-dollar satellite, Viasat, risks disrupting space insurance market

Valued at over $1 billion, Viasat's orbiting satellites have drawn the attention of space insurers, who are bracing for potential substantial claims.

The company's $1 billion ViaSat-3 Americas satellite, which is critical to increasing its fixed-broadband coverage and competing with rivals such as Elon Musk's Starlink, encountered an unforeseen difficulty while deploying its antenna in space in April.

If Viasat declares it a total loss, industry officials anticipate the claim would be a record-breaking $420 million, making it more difficult and expensive for other satellite operators to obtain insurance. Due to the financial risk of insuring such a costly satellite, ViaSat-3 is most likely protected by insurance from different providers.

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The Seatle Times quoted Denis Bensoussan, head of satellite insurance for Beazley Insurance, as saying, "No single insurer wants to take the risk by itself; no other big insurer was prepared to openly reveal its involvement as a satellite underwriter."

Viasat's satellite woes affect insurance landscape

Viasat's problems in orbit come just a few years after major insurers such as American International Group and Allianz SE wound down their space portfolios. As a result, the $553 million market has a narrower pool of suppliers to bear the risks.

While big telecommunications companies with multimillion-dollar satellites continue to seek coverage, other space operators focused on launching huge batches of lesser satellites into low Earth orbit, such as Musk's SpaceX, aren't. To them, the loss of one satellite is nothing.

Executives at Viasat said it is too early to speculate on whether the company will launch a lawsuit. "We can take another couple or three months to obtain accurate measurements and then make those decisions without any consequences," Viasat CEO Mark Dankberg told analysts on August9, as reported by The Seattle Times, following the company's announcement of better-than-expected quarterly earnings.

Investors, on the other hand, are concerned. ViaSat stock dropped 28 percent in a single day, setting a new low after the company announced the ViaSat-3 problem in July. Executives now predict that the satellite problem would slow growth in 2025, although the impact would be restricted to its fixed-broadband service, which accounts for approximately 13 percent of its revenue.

Last month, William Blair's Louie DiPalma informed clients that the company's ViaSat-2 satellite, launched in 2017, also encountered an antenna abnormality, prompting a $188 million claim.

Following the discovery of the Inmarsat-6 issue, Viasat and other industry players "will almost certainly face significant difficulties in obtaining insurance for future satellite launches," DiPalma said in a note Friday.

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