Gad Assists Development Of Uk Spaceflight Industry
15th October 2020
Government Actuary's Deprtment (GAD) takes part in a cross-government project to set insurance requirements and provide risk analysis for the new UK spaceflight launch industry.
The Government Actuary's Department (GAD) has been at the centre of helping set up the new spaceflight launch industry in the UK.
Experts from GAD have provided the UK Space Agency, Department for Transport (DfT) and the Civil Aviation Authority (CAA) with support in terms of setting insurance requirements and providing risk analysis for this new frontier.
The work has been carried out ahead of spaceflight launches which are set to take off from the UK in the early 2020s. In preparation for this, DfT, UK Space Agency and CAA have launched a consultation on legislation and insurance requirements associated with launch activity.
Safety is at the heart of our proposed regulatory regime under the Space Industry Act 2018. Launch from the UK is a new activity that presents new and different risks from those posed by traditional aviation.
Operators will be required to demonstrate that the risks their activities pose to the uninvolved general public are as low as reasonably practicable. They will also need to demonstrate that the residual risk is at a level that is acceptable to the regulator. If an accident does happen, insurance therefore provides an important resource to meet potential claims.
GAD has helped to develop the methodology to enable the spaceflight regulator to assess the amount of third-party liability insurance which spacecraft operators will have to buy to cover the unlikely event that a spaceflight accident impacts on third parties.
The UK government is proposing to use a Modelled Insurance Requirement (MIR) approach to assess the impacts of a range of accident scenarios to tailor the insurance required to the specific risks of each launch. The MIR calculation takes into account the following areas:
property damage (residential/commercial and agricultural)
damage to the environment
damage and destruction of high value infrastructure (for example oil and gas facilities)
Nick Clitheroe, the GAD actuary who led the project said: "We were asked to help UK Space Agency establish a set of financial values for each of these categories that could be applied in the MIR. While a similar approach is used in the USA, the MIR needed to reflect the UK's compensation system and different launch risk profile.
"Given the inherent uncertainty about who or what might be impact in an accident, the methodology was needed to take a large range of variables into account. These helped the UK government to determine a single figure for each category.
"The aim was to derive a robust figure that reduced the risks of over- or under insurance for operators and minimised the government's contingent liability.
“This is important because the insurance market does not have sufficient capacity to cover all of the risk that may arise. Above an upper limit of insurance required for each launch, the government would take on the liability."
Modelling and calculations
The UK Space Agency undertook the modelling of potential events leading to third party claims and GAD advised on the average payment that courts would likely award in the event of death, injury or property damage.
GAD built a detailed model which placed values based on the current level of earnings. We also worked out how much would be paid as a lump sum in the event of death or serious injury. The information and data came from the Office of National Statistics and from the Ogden Tables.
GAD has been working with the UK Space Agency on the insurance and risk analysis as a way of further quantifying how much incidents may cost. As part of this, we devised an average payment for each incident and the UK Space Agency was able to apply that to their modelling.
The current consultation asks people to provide comments on the MIR approach and the approach to limiting operator liabilities. It lasts 4 weeks and will close on 10 November 2020.
Consultation at https://www.gov.uk/government/speeches/consultation-on-draft-insurance-and-liabilities-requirements-to-implement-the-space-industry-act-2018