Insat-2d Failure To Push Up Premium On Isro Satellites
Insurance PSUs expect $60m claim from the Indian space agency
The four public sector insurance companies which have jointly insured the countrys space programme, expect an insurance claim of $60 million for the failure of Insat-2D satellite early this month.
They also expect insurance premium on satellites of the Indian Space Research Organisation (Isro) to go up when they come up for renegotiation. Insurance policies are for one year and the closing date for Insat-2D is December 31. The risk perception is now higher. The international reinsurers also feel that Isro satellites should attract lower ratings in terms of risk, a United India Insurance official said.
Customers usually get discounts on premium on the basis of good claims experience which means no or extremely low claims made in the past. Since the Insat-2D case involves high claims, future policies covering all Indian satellites will not get this form of rebate, sources said.
Isro can expect sufficient compensation, but it will have to bear a considerably higher rate of premium to get both the existing satellites and future launches insured.
Nearly 95 per cent of the policy on Insat-2D had been resold by the insurance PSUs to insurers in Europe and United States, leaving them with a burden of only 5 per cent of the claims.
The public sector insurance companies have given exclusive authority to New India Insurance to deal with Isro for structuring insurance policies and dealing with the issue of claims.
New India and Isro officials are analysing the damage. Questions are now being raised on whether Isro had carried out sufficient ground testing before launching Insat-2D. Other issues like the residual value of the satellite will also have to be determined. Isro scientists have gone off record saying that Insat-2D has lost its utility because it does not face the earth anymore, although it is still possible to track the satellite from ground.
Insurance officials, however, expect Isro to still make some use of the satellite, which might help reduce the extent of claims. New India will soon indicate the extent of claims each of the four insurance PSUs will have to pay. Once we get word from New India, we will make the necessary provision as liability reserves in our books for future settlement of claims, the United India source said.
Policies covering different stages of the project like pre-launch preparation, launching and testing and the utilisation period are covered separately. There is no yardstick to determine the premium rates on space programmes. It is done through negotiated package deals, a New India source said.