Insurance Article, The Insurance Times 2022, The Insurance Times March 2022


The need for insurance has become ubiquitous with maximum people investing in insurance products as per their requirements. Interestingly, demand for insurance products for a plethora of risks that were usually not covered by insurance companies has started gaining traction. With India allowing private companies to operate within the premises of Indian Space Research Organization (ISRO), this is expected to create huge opportunities for the country’s fledgling aerospace start-ups. These could range from building and launching rockets and satellites to providing space services commercially and even being part of planetary exploration mission. At least two Indian rocket startups are racing to put small satellites into orbits next year, hoping to garner a slice of the growing market for transportation of payloads to space. Hyderabad-based Skyroot has named its satellite launch vehicle Vikram, while Chennai-based Agnikul calls its vehicle Agnibaan. While the sector has drawn early interest from investors, launching a rocket is fraught with operational and technical challenges. The new reforms would allow the private sector to play an active role in satellites, launches and space-based services but as always, implementation is key. Properly executing these reforms will require enabling policies and appropriate regulatory frameworks.

n December 2018, Mumbai-based Exseed Space created nothing short of history by being the first private commercial organisation in the country to launch a satellite in space via Elon Musk-led SpaceX. The company, now rechristened Satellize, managed to slash the cost of building a satellite considerably. So, while earlier satellites would cost Rs 1,000 crore each to build and launch, Satellize’s technology brought this down to under Rs 10 crore each. The company was founded by Mahesh Murthy and Asshar Farhan. Their satellites are beneficial for imaging, communication and other data gathering purposes. . A range of use cases such as helping detect diseases on farms and increasing crop yields; monitoring road and infrastructure construction; helping cities govern themselves better and detect intruders via sea, forest or land; picking up distress calls of teams in remote mountainous areas for search and rescue operations are possible via Satellize. India is becoming an increasingly popular destination for launching space objects, due to their highly successful launch vehicles. However, attempting to launch a space object out of India can pose challenges for entrepreneurs for several reasons. India’s space-based activities have been growing in leaps and bounds this decade. And as its demands and requirements grow, especially in commercial potential, so also must regulations. To this end, the government recently promulgated reforms on four fronts:

  1. Private sector participation in carrying out end-to-end space activities
  2. Announcement of opportunities to the Industry
  3. Focus on development of new technologies and facility sharing with the private sector
  4. The changed role in NSIL to own and operate launch vehicles, satellites and services

Thus, the DOS will enable private players to accomplish space activities by creating a nodal agency in the form of IN-SPACe to promote and monitor private sector’s space activities. It will enable the promotion and handholding of Industry, sharing of ISRO facilities either free or at reasonable costs and establishment of facilities in DOS premises. The Draft National Space Transportation Policy-2020 is comprehensive covering all aspects of rocket launching, launchpads, reentry of a space object and others. The recent reforms towards unlocking the potential of the space sector in the country are expected to attract entrepreneurs to invest in cost-effective & quick turn-around space transportation systems commensurate with the significant global commercial launch services market.

Indian space industry

The Indian space industry is regulated by key government organizations. Similarly, the main operators are government organisations – however this may begin to change as private sector growth is encouraged by proposed legislation.

  1. Key regulatory mechanisms include,
  2. Indian Space Research Organisation
  3. Antrix Corporation Limited (ACL)

The ISRO is the key government body that offers launch services to national and foreign entities. The ISRO regulates all parts of the Indian Space industry and operates under the Department of Space. On date of writing, the ISRO has launched 297 foreign satellites of 33 different countries. There is definitely an established flight history. The ISRO operates a PSLV (Polar Satellite Launch Vehicle) and a GSLV (Geosynchronous Satellite Launch Vehicle).  Antrix is a company owned by the Government of India and is under the administrative control of the Department of Space. Antrix is the commercial arm of the ISRO. If a foreign entity wishes to launch out of India, they have to form a contract with Antrix in order to obtain launch services. Contracts with Antrix form the launch agreement. The details of such contracts are only available to the involved parties. That the new reforms will allow private sector players to use ISRO facilities is a big deal.  This indeed must be music to the ears of commercial players who have been seeking to get a fair share of the pie in terms of manufacturing of satellites and propellant technologies, among other areas. It should not be too difficult for India’s private space sector because there is a sizeable talent pool available outside ISRO. More importantly, the entry of the private sector, as in the telecom sector, can bring several advantages in terms of cost and access.

National Space Legislation in India

Today, the Indian space programme is not just about civilian applications for remote-sensing, meteorology and communication, as in the early decades. India’s space sector and its requirements have grown enormously in the last decade to include television and broadband services, space science and exploration, space-based navigation and, of course, defence and security applications. Despite this well-established commercial framework involving ISRO and Antrix, there is a lack of uniform national space legislation in India. The Space Activities Bill 2017 is important as it contains rules that apply not only to Indian citizens, but also foreigners wishing to launch out of India. Some of the key provisions in this Bill include:

  • The central government still has the power to create relevant rules
  • The central government will formulate processes for distributing and authorising licenses for commercial space activities
  • The central government will create and maintain a register for space objects
  • If any person undertakes any commercial space activity without authorisation, they shall be punished with imprisonment up to 3 years or fined more than Rs.1 crore or both.

Advantages of launching from India

PSLV, with capabilities to perform low inclination LEO, SSO, Geo-synchronous Transfer Orbit (GTO) and sub-GTO missions, is a versatile, robust and reliable launcher.  PSLV has so far had 35 successive successful flights.  PSLV, with its several satellite mounting adaptor options, can accommodate a number of satellites in a single launch, making it an ideal launcher for nano, micro, mini and main satellites together.  So far, 74 international customer satellites from 20 countries have been successfully launched onboard PSLV, through commercial arrangements. India has significant flight heritage with its launch vehicles. There is a well-established commercial framework, with many operators having successfully dealt with Antrix Corporation in the past, including Australian operators. India can be seen as a more flexible launch destination, due to the lack of strict national legislation Caution ought to be exercised, due to the nature of the commercial framework being governed by regulators rather than legislation. This leaves room for unpredictability. Previous operators contract terms with Antrix are publicly unknown, and as such precise details are unknown. Recent events in relation to the launch of Swarm satellites highlight the need to ensure you are meeting your domestic obligations as well as any Indian obligations contained in your launch services contract. There were adverse reactions from many countries following the Indian ASAT test. These considerations may be relevant to your operations out of India.

Indian National Space Promotion and Authorisation Centre

ISRO has in the last few years been opening up to the Indian private space sector in a gradual manner – mostly as a matter of compulsion because ISRO simply does not have the in-house capacity to address India’s growing requirements. ISRO has said Indian National Space Promotion and Authorisation Centre (In-SPACe), the new nodal agency which was approved by the Cabinet this week, will take six months to start functioning. In-SPACe will drive the building of satellites, rockets, or launch services through Indian industry. The Cabinet approved participation of the private sector in the entire range of space activities. Participation of start-ups in the space sector has largely been minimal so far. Their participation will be the key towards building India’s very own aerospace companies such as Maxar, Elon Musk’s SpaceX and Rocket Labs, according to experts.

  • Skyroot Aerospace, a Hyderabad-based startup, became the first private company to test upper-stage rocket engine. The 3-D printed rocket engine named after Nobel laureate CV Raman weighs less than half of conventional rocket engines with a similar capacity. Hyderabad-based full-stack space systems design and Development Company Dhruva Space anticipates that renewed efforts and regulatory reforms will further boost the ‘new space’ industry in India. Skyroot plans to make a ‘family of rockets’ and launch them in space. The first rocket, which can hurl satellites of 250-700 kgs into a lower Earth orbit, is expected to be launched by the end of 2021. The startup was launched in 2018 and has the backing of CureFit founders Mukesh Bansal and Ankit Nagori, and Solar Industries.
  • Bengaluru-based Pixxel, which is India’s first private earth imaging company, has also reached out to ISRO to access its testing facilities. Pixxel is working on building a constellation of earth-imaging small satellites to provide real-time and affordable satellite imagery. It will provide global coverage every 24 hours, once the satellites are fully deployed.
  • Founded in 2016, Agnikul Cosmos is based in Chennai. This startup makes small launch vehicles. This startup was incubated at IIT Madras and became a part of the Airbus Accelerator. The team which comprises scientists, engineers, programmers and even lawyers want to be a part of India’s space journey. Their rocket called Agnibaan is a semicryogenic engine combustor and will be 3D printed. The startup is planning to launch the rocket by the end of 2022.
  • Bellatrix Aerospace, founded in 2015, makes propulsion systems for satellites and is now designing a small rocket. This Indian Institute of Science (IISc)-incubated company is designing a small rocket that can take a 150kg satellite up 550 km into space. This startup’s USP is that it has built an electric propulsion system that runs on water! The Bengaluru-based Bellatrix has also developed a green fuel that is 30% more efficient and non-toxic, which according to the startup can power conventional engines on satellites.
  • This two year old startup generates geospatial data intelligence for environmental monitoring and climate risk assessment. Blue Sky Analytics was set up by siblings Abhilasha and Kshitij Purwar and is based out of Gurgaon. In 2019, they won the Copernicus Masters Social Entrepreneurship Challenge of the European Space Agency for their innovation in using geospatial data for improved environmental monitoring. In 2019, Blue Sky unveiled BreeZo, an air quality dataset available as Application Programming Interface for researchers, governments, and private companies. The company is now working on launching Zuri, a forest and farm fire management system.
  • Government has created Indian National Space, Promotion & Authorization Centre (INSPACe), under Department of Space to encourage, promote and hand hold the private sector for their participation in Space Sector. Private players will also be able to use ISRO infrastructure through INSPACe.

The role of New Space India Limited (NSIL) in the post reformed space sector would be to build launch vehicles, providing launch services, build satellites, providing space based services, technology transfers, etc. There are more than 500 companies that partner with ISRO in carrying out space activities. The broad areas and sectors covered by private companies’ are- providing materials, mechanical fabrication, electronic fabrication, system development, integration, etc. The Government would allow private initiative in space exploration to utilize those infrastructures of ISRO which are otherwise not available elsewhere in India and there will be reasonable charges for utilization of Government infrastructure which will be varying depending on the requirement.

Commercialization of ground operations

ISRO has long been associated with private firms like Larsen & Toubro, Godrej and Walchand Nagar Industries. It is just that the mode of participation envisaged through the new reforms is very different. The current mode of work, more of an outsourcing model, is becoming inadequate. In the last few years, because of significant capacity deficit, ISRO began to work with a few in the private sector such as the Bengaluru-based Alpha Design Technologies, contracted to build satellites. Similarly, Bellatrix Aerospace began to work with ISRO on advanced in-space propulsion systems. But these remain exceptions. NSIL has shifted from an erstwhile, supply driven model, focusing on Commercial exploitation of ISRO, to a demand driven model having the ability to act as a satellite operator performing highly complex and capital-intensive activities. There is also huge scope for the commercialization of ground operations like mission support, satellite broadband gateways and 5G backhauling.

One of the firms Astrome could potentially compete globally with tech entrepreneur Elon Musk’s SpaceX, to solve the problem of connectivity by beaming high bandwidth internet from space. It is developing a technology that could make the cost of internet access through satellites affordable. There could be opportunities for the Indian space sector to collaborate with start-ups by licensing their technologies and working together in lower orbits possibly.  The firm it is moving up the value chain by deploying its wireless backhaul products in ‘terrestrial’ followed by early trials of its space products in 2020. Last month, Elon Musk’s SpaceX became the first private firm to launch human beings into orbit using the Falcon 9 rocket and Crew Dragon spacecraft. The launch was important as it signified American astronauts being launched into orbit, since 2011. Space entrepreneurs want to achieve a similar feat in India as well. The changing focus of ISRO’s commercial arm, New Space India (NSIL), from supply-driven approach to a demand-driven one indicates that majority of the commercial activities may be outsourced to numerous industries as and when there is increasing demand. This will surely help ISRO receive more international orders since it will be able to deliver more frequent launches than before. The firm is aiming to reduce satellite mission cost through its patented systems.

Indian space sector

India opened up its space programme to the personal sector previous calendar year, hoping to encourage local companies to enter the burgeoning marketplace for little satellite launches. Considering the fact that then, quite a few startups have declared their ambition to enter the current market, together with Bengaluru-based Bellatrix Aerospace and Mumbai-primarily based Urvyam. Equally are performing on rockets but have not introduced their designs for start. The Indian space sector has the potential to become a $50 billion industry, growing at a compound annual growth rate or CAGR of 48 per cent over the next five years. Since India is a major space-faring nation, Indian start-ups can leverage the situation for business gains, provided ISRO handholds them. Hyderabad-based Skyroot has named its satellite launch vehicle Vikram, while Chennai-based Agnikul calls its Agnibaan. If their test flights are successful, the companies plan to provide launch services for sending small satellites to space for applications such as Earth observation and communication.

India opened up its space programme to the private sector last year, hoping to encourage local firms to enter the burgeoning market for small satellite launches. Since then, several startups have announced their ambition to enter the market, including Bengaluru-based Bellatrix Aerospace and Mumbai-based Urvyam. Both are working on rockets but haven’t announced their plans for launch. In all, there are over 24 space-tech companies in India developing satellites, rockets, engines, propulsion systems, communication solutions, and other space-tech related work. Agnikul’s focus is on building a single customizable vehicle with four to seven 3D-printed engines for payloads up to 100kg. Skyroot plans to build three Vikram series vehicles to support payloads, ranging between 225kg and 720kg. Currently, satellite launches cost $30,000-80,000 per kg, depending on the weight of the payload (higher per kg cost for smaller payloads). Skyroot aims to cut that down by at least a third with its Vikram rocket, while Agnikul plans to establish a single reasonable cost across all payload sizes. However, the latter did not share specifics. Indian industry accounts for a mere 3% in the rising $360-billion global space market. Rockets and satellite launch accounts for just 2% of it. Programmes like satellite-based services and ground-based system control the rest of the market.

A new space race in India

An India-based launch company, Skyroot Aerospace, announced that it has raised $11 million in Series-A funding. This is so far the largest investment in the Indian space startup scene after the Indian cabinet approved private sector participation in space activities. Another Indian company, Agnikul, also raised $11 million. One day earlier, on Wednesday, space tech startup Agnikul announced that it has raised $11 million in Series-A funding. In its emailed news release, Agnikul said this total made it “the largest funding round for a private Indian space technology company in India. Agnikul claims to be the first company in the world to design a rocket engine that can be printed in a single piece. Its liquid-fueled satellite-launch vehicle, named Agnibaan (or sometimes Agniban), is capable of launching up to 100 kg of payload to low Earth orbit. Agnibaan may make a test flight in 2022. This has the makings of a fun race to commercial space in India

In all, there are over 24 space-tech companies in India developing satellites, rockets, engines, propulsion systems, communication solutions, and other space-tech related work. Agnikul’s focus is on building a single customizable vehicle with four to seven 3D-printed engines for payloads up to 100kg. Skyroot plans to build three Vikram series vehicles to support payloads, ranging between 225kg and 720kg. Currently, satellite launches cost $30,000-80,000 per kg, depending on the weight of the payload (higher per kg cost for smaller payloads). Skyroot aims to cut that down by at least a third with its Vikram rocket, while Agnikul plans to establish a single reasonable cost across all payload sizes. However, the latter did not share specifics. The sector has drawn early interest from investors such as Pi Ventures, Speciale Invest, LetsVenture, Graph Ventures, and Omnivore. According to VCCEdge data, Agnikul has raised around $14.5 million, while Skyroot has raised about $12.5 million. Even with ample funding, launching a rocket is fraught with operational and technical challenges. Attempting to build a launcher with venture capital money and a shoestring budget is even more demanding.

The global launch services market is valued at $6 billion and is slated to grow six times over the next decade. India has captured just 1% of this opportunity and can raise its share 10-fold to about $600 million by 2030-31. The shift will be driven by startups such as Agnikul and Skyroot. However, to establish their presence in the long run, the companies will have to focus on ensuring reliability before affordability. Most people building a satellite will look for a reliable launch vehicle first and then look at the cost of that particular vehicle. So, the goal should be to prove that their vehicles are going to be reliable. If they are able to do that, they can challenge the international market by offering very competitive prices that attract international companies to come and launch out of India.

Insurance sector to render services in space domain

This is expected to address a long-pending concern on covering liabilities in the event of a mishap or damage to spacecraft. India’s space policy currently does not cover liabilities for damage to third party space assets although the country is a signatory to the UN Treaties on outer space activity. The Bill will help formulate necessary rules under the Space Activities Act to deal with damages under the liability provisions and the mode of securing financial guarantee to compensate for damages. ISRO is now looking at changes that will pave the way for the insurance sector to render services in the space domain.

ISRO is going to cover the entire gamut of space activities through policies. A comprehensive Space Act is required as well as different policies like launch vehicle and space exploration policies are in the pipeline. Also, the existing space policies like Satcom and remote sensing data policies are being amended for greater inclusivity and transparency. Proposed changes will also pave the way for the insurance sector to render services in the space domain as this is absolutely essential for satellite and launch services. Department of Space is also working towards creating a formal system to support space sector startups and MSMEs in taking up innovation, research as well as product development. This programme is conceived as “Space Entrepreneurship & Enterprise Development (SEED). The space industry, various stakeholders, entrepreneurs and investors are eagerly looking for new opportunities in space business. The global space economy is on a growth trajectory and our domestic requirements are also growing multifold. To meet these requirements, it is essential that the private sector must contribute a bigger share in the national space programme and also must have its own programme catering to both national and global requirements. There was no regulatory body for private sector space activities, but now a formal mechanism has been put in place by unlocking the space sector. We envisage a scenario where the private sector will be a co-traveller in ISRO’s space mission, and private sector will also be empowered to carry out its own space missions.

Space Liability Insurance in India

The space policy in India is still at its nascent stage and could be moulded to ensure that the liability on start-ups is limited. Similar to major space-faring nations, India should establish a liability sharing arrangement between the government and the private sector. This will enable small players to take risks with space operations and explorations, and encourage start-ups to innovate in the space sector. In India, currently there is no domestic space policy governing issues of space liability and insurance. As a result, there is no policy governing the extent to which private entities are liable for damage caused to third parties or to space assets due to their space operations. Both, the pending Space Activities Bill, 2017 and the recently released draft Space Based Communications Policy, 2020 hold private entities liable for any damage caused due to its space operations, and require such entities to insure itself against any liability accruing from such operations in India or outside India. Both these frameworks, hold private entities solely responsible for any damage caused during space operations, thereby creating an undue burden on private entities especially start-ups with limited financial capacity and resources. In India, the Space Activities Bill, 2017 provides that the Central government will determine the quantum of liability to be imposed upon the licensee, as may be prescribed. Since the Indian space sector has several bigger private players, small start-ups and MSMEs. India could consider prescribing different quantum of liability based on each company’s financial capacity and ability to pay. This will enable small players to take on risks and participate in encourage private entities to take on more space operations, despite the risks involved.

Space insurance is roughly divided into four types of coverage. They reflect the phases of most satellite projects – preparing and launching the satellite, then positioning and operating it in orbit. Space insurance solutions are tailored to each policyholder’s needs. They may cover loss of income as well as material damage. Pre-launch insurance provides all-risks coverage for material damage in the pre-launch phase. This phase comprises the satellite’s move from the manufacturer’s premises to the launch site; the satellite’s launch configuration, integration into the launch vehicle; and all launch preparations. The coverage generally terminates when the ownership of the satellite – and hence the risk – passes from manufacturer to purchaser. At the latest, the risk transfers when the launch can no longer be aborted – often a few seconds after ignition. In such cases, pre-launch insurance covers – if only for a very short time – the risk that the launch vehicle will fail to operate. If the cover has terminated at an earlier point in time, it may reattach if the launch is aborted (post-abort coverage). The draft policy states, globally, the participation of private agencies in providing launch services has increased and some of these agencies have become significant players in the commercial market for launch services. India is also witnessing the emergence of a “New Space” wherein the private players in the space sector aim to tap the commercial potential of small satellite launch services by developing small satellite launchers for the global market. For space insurance, as the sample size grows and insurance companies become confident in their pricing models, they are going to be able to more accurately price these things.

The global space economy is pegged at $360 billion of which the Indian space economy is around 2 per cent valued at $7 billion. ISRO signed up with the Rs 400 crore company to give India its first large private satellite. ISRO also wants to seed an ecosystem where the private sector takes a lead in the future. After almost 150 missions and three decades of space faring, the ISRO is on a mission like never before, handholding the private industry to make a full navigation satellite. Insurtech companies have increasingly become the focus of investor attention as they flock towards startups in countries that could see higher adoption of insurance policies. China and India are collectively home to nearly half of private insurtech companies in the Asia-Pacific region. The two markets will continue to corner the lion’s share of investor interest, thanks to their large and fast-growing insurance markets. Of the 335 private insurtech ventures operating in the APAC region, about 122 of them have roots in either China or India. Collectively, these firms have managed to corner 78% of the venture capital invested in insurtech in the region. The APAC region, with most of its insurtechs complementing existing carriers, presents a contrast to the U.S., where private capital is skewed toward full-stack companies looking to disrupt the incumbents. The insurtech startups that will grow the fastest in the region will be those that embrace both offline and online distribution channels.

The insurance of satellites with complex and new types of payload is where the know-how and experience of our aerospace experts really pays off. The deployment of previously untried satellites always raises questions about their insurability. A lot of hard work and dedication is required during all phases. Manufacturer’s technical specifications and presentations, discussions with the manufacturer, operator and broker all need to be analyzed before the pieces of the puzzle can be assembled into a well-designed coverage concept. India has decided to allow private companies to establish and operate rocket launch sites within and outside the country, subject to prior authorization from the government. Similarly, any rocket launch (orbital or sub-orbital) from Indian or overseas territory can be carried out only with authorization from Indian National Space Promotion & Authorization Center (IN-SPACe), an independent body constituted by the Government of India, under the Department of Space (DOS). The Draft National Space Transportation Policy-2020 is comprehensive covering all aspects of rocket launching, launchpads, reentry of a space object and others. The draft policy categorically states that IN-SPACe or the Union of India shall not have any liability related to launches performed outside of the territory of India. That means it may be boon to Indian Insurance industry. The Indian players, who are engaged in the launch vehicle development, are also eager to leverage the national facilities already established by the Government.

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