5. Space Insurance
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Mémoire présenté devant le Centre d’Etudes Actuarielles pour l’obtention du diplôme du Centre d’Etudes Actuarielles et l’admission à l’Institut des Actuaires le : 27 Janvier 2012 Par : Jean-François GAUCHE Titre : SPACE RISKS ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ Confidentialité : NON OUI (Durée : 1an 2 ans) Les signataires s’engagent à respecter la confidentialité indiquée ci-dessus Membre présent du jury de signature Entreprise : l’Institut des Actuaires : Nom : ______________________________ ________________________ Signature : Membres présents du jury du Directeur de mémoire en entreprise : Centre d’Etudes Actuarielles : Thomas BEHAR Nom : ______________________________ Signature : Vincent DAMAS Invité : Gérard CROSET Arnaud COHEN Nom : ______________________________ Signature : Jean-Pierre DIAZ Brigitte DUBUS Paul ESMEIN Autorisation de publication et de Michel FROMENTEAU mise en ligne sur un site de Stéphane MENART diffusion de documents actuariels (après expiration de l’éventuel délai de Christophe IZART confidentialité) Pierre PETAUTON Signature du responsable entreprise Florence PICARD Olivier LOPEZ Secrétariat : Signature du candidat Bibliothèque : 4 rue Chauveau Lagarde 75008 Paris Tél. : 01 44 51 72 72 / Fax : 01 44 51 72 73 MMéémmooiirree AAccttuuaarriiaatt SSppaaccee RRiisskkss Jean-François Gauché Centre d’Etude Décembre 2011 Actuarielle Forewords The present paper is the final work to validate the graduation of actuary studies in the “Centre d’Etude Actuarielle”. The purpose of this work is to analyze the space business environment with an actuary angle in order to find solutions to manage efficiently the underlying space risks. This is an attempt to formalize the business practices with statistics and mathematical models. The main outcome is to calculate the “cost of risk” in the space sector. One of the benefits of this paper is to provide a synthesis of a wide set of data gathered from different origins and analyzed in detail to derive claim and pricing models. The high quality data is inherited from different sources and a strong experience of the space environment. The space insurance market practice is generally relying on an empirical approach and is strongly driven by the offer and demand equilibrium. This paper proposes to analyse this market with a mathematical viewpoint and using an actuarial methodology which is also used by many insurers, and see how both approaches can be conciliated. Finally, the interest of this work is to measure the risk exposure for all the actors of the space business using a common model. The optimization of the risk coverage is analyzed in detail. The main contribution of this work is to propose a panel of solutions to manage those risks and measure their efficiency with mathematical models. I would like to address special thanks to Philippe Cotelle for his expertise in the frame of the space risk management and insurance. He has been challenging the content of this work and has given me the opportunity to implement the methodology developed in this paper on concrete cases. I am also very thankful towards my Astrium colleagues, especially Mrs Jallade, Mr Gajewski and Mr Maurel, who have actively participated in the development of risk models within the company from which were inspired some models presented in this paper. Finally I want also to thank all the teachers of CEA for the high quality of the courses which are thought in the frame of the actuary master. The highly valuable methodologies and tools that I have been taught were a key element in my daily work as risk manager. Among them, I want to address a special thank to Mr Robert and Mr Lopez for their valuable advises on my work and their availability to discuss the problematic of my paper. 3 4 Table of Contents 1. INTRODUCTION ........................................................................................................................... 11 2. EXECUTIVE SUMMARY...............................................................................................................13 2.1 INTRODUCTION ........................................................................................................................ 13 2.2 SPACE BUSINESS..................................................................................................................... 14 2.3 SPACE RISKS........................................................................................................................... 15 2.4 SPACE INSURANCE................................................................................................................... 19 2.5 CASE STUDY: SPACE ACTORS .................................................................................................. 20 2.6 CONCLUSION ........................................................................................................................... 22 3. SPACE ENVIRONMENT...............................................................................................................39 3.1 SPACE BUSINESS..................................................................................................................... 40 3.1.1 Satellite Markets ............................................................................................................ 40 3.1.2 Commercial Market Organization.................................................................................. 42 3.2 SATELLITES ............................................................................................................................. 47 3.2.1 Telecom Satellites ......................................................................................................... 48 3.2.2 Earth Observation Satellites .......................................................................................... 50 3.3 LAUNCHERS............................................................................................................................. 52 3.3.1 Principle ......................................................................................................................... 52 3.3.2 Main Launchers ............................................................................................................. 53 4. SPACE RISKS .............................................................................................................................. 57 4.1 INTRODUCTION: SPACE RISKS OVERVIEW .................................................................................. 58 4.2 LAUNCH RISK MODEL............................................................................................................... 62 4.2.1 Overview........................................................................................................................62 4.2.2 Launch Failure History................................................................................................... 64 4.2.3 Model definition.............................................................................................................. 66 4.3 IN ORBIT TEST RISK MODEL ..................................................................................................... 75 4.3.1 Overview........................................................................................................................75 4.3.2 IOT Failure History......................................................................................................... 78 4.3.3 Model Definition............................................................................................................. 80 4.3.4 IOT Failure Frequency Model........................................................................................ 82 4.3.5 IOT Failure Severity Model............................................................................................ 85 4.4 IN ORBIT LIFE RISK MODEL ...................................................................................................... 90 4.4.1 Overview........................................................................................................................90 4.4.2 IOL Failure History......................................................................................................... 92 4.4.3 Model Definition............................................................................................................. 94 4.4.4 IOL Failure Frequency Model ........................................................................................ 95 4.4.5 IOL Failure Severity Model .......................................................................................... 104 4.5 CONCLUSION ......................................................................................................................... 105 5 5. SPACE INSURANCE.................................................................................................................. 107 5.1 MARKET OVERVIEW ............................................................................................................... 108 5.1.1 Space Insurance Coverage ......................................................................................... 108 5.1.2 Market Metrics ............................................................................................................. 109 5.2 INSURER LOSS MODEL ..........................................................................................................