Could an additional $15 million in insurance costs mean the end of the Proton’s commercial viability? The Russians seem to think so…

As launch prices drop, the extra $15 million will be a huge deal. A lot depends on what price SpaceX chooses. They can drop prices quite a bit and still turn a profit but they need a significant cushion to pay back investors and invest in development.

Updated numbers after reading the article:
$150 million to build the satellite, %65 million to launch the satellite, and $10 million to insure the satellite (add $15 million more insurance costs to insure a Russian launch).

To be fair, the 1990s insurance costs included all 15 years of satellite operation, but the riskiest time for a satellite is launch, release, and deployment.

“When you spend a couple hundred million whats another ten million?”

Could an additional $15 million in insurance costs mean the end of the Proton’s commercial viability? The Russians seem to think so, because they are considering insuring their own launches until the underwriters bring down their prices, since the additional cost (7%) seems to be keeping customers away. It seems that a mere ten million is enough to be an important consideration in the satellite industry.

Under the old launch system, they appear almost inconsequential. When you spend a couple hundred million whats another ten million? However, under the system SpaceX brings us, ten million dollars is a significant part of the total cost to the customer, even at their current prices. This is really a reflection of the value of the payload but still emphasizes how big an impact SpaceX has been.

Launching used to be one of the biggest costs of putting something in space but soon, insurance could be one of the largest costs after payload construction.

From the article: “… Russian Proton rocket, which satellite operators and insurers say is a necessary third leg for the commercial market — the SpaceX Falcon 9 and the ArianeGroup Ariane 5 being the other two …”

Satellite operators consider Proton, not ULA, as one of their three top choices for launch. Despite the insurance cost and the recent problems with Russian rockets, the satellite operators like the $65-ish million price tag plus the higher insurance premium over ULA’s price tag.

From the article: As soon as satellite operators make the choice of Proton again, we [insurance companies] will support the operators — as we always have done. At the moment there have not been many recent [commercial] launches with Proton.”

The insurers are also using the satellite operators as a bellwether for faith in the various rockets. The operators tend to be picky about the rockets they choose, despite the insurance. The operators only are reimbursed for the direct costs of buying the satellite and the launch, not the lost business, interest on loans to buy the satellite, or any other lost opportunity costs.

Robert wrote: “I suspect that insurers do not trust this set-up for being the best vehicle for achieving efficiency and good quality control”

It is unclear to me what the reason is, but it is clear that the insurance companies do not yet have faith that the recent stand down of Russian rocket launches has resulted in the reliability that these companies look for in a launch rocket.

The article and the interview portion are full of interesting tidbits.

Walter B. Gibson, American Writer 1897-1985 (AKA Maxwell Grant)
http://www.mysticlightpress.com/index.php?page_id=131

Estimated he wrote in excess of 29 million words in his career.

Garry: Oy. I am typing too fast these days. Title fixed.

With $8 billion class payloads like the JWST, and human space flight, there is a market for the safest launcher, regardless everything else. And the safest is the one most proven. Which is the reusable one. Thus the most valuable payloads will, in a few years, be launched on Falcon 9.