The space industry is booming — and the insurers who cover it are watching their best business disappear

Space 4 min 80 sources

Operators are cancelling the giant satellites that bankroll space insurance and pivoting to cheap swarms that mostly aren't insured at all. The week's $75 billion SpaceX IPO is the same shift, seen from the winning side.

Key takeaways

Operators are cancelling the giant geostationary satellites that supply most of space insurance's steady income, pivoting cash to cheap low-orbit swarms instead.
The catch: those swarms barely buy insurance — only 5-7% of low-orbit satellites are covered — so the fastest-growing part of the industry pays least into the pool that absorbs everyone's losses.
The same shift behind SpaceX's record $75 billion IPO is thinning the insurance market that smaller space firms rely on to raise money, just as a wave of new ventures tries to do exactly that.

It was the loudest week the space business has had in years. On Friday, SpaceX went public, raised $75 billion in a single morning, and closed up 19% — a market value around $2.11 trillion, and enough to make Elon Musk the world’s first trillionaire on paper [80]. The same morning, an hour before the stock opened, a SpaceX rocket put 29 more Starlink satellites in orbit [61]. Money is pouring toward space. But a quieter story from the same week shows the bill that growth is leaving behind — for the people whose job is to absorb the risk when a rocket fails.

The business that nobody notices is in trouble

Three big communications satellites just got cancelled before they were ever built. SES, a Luxembourg fleet operator, said in May it no longer needed two satellites that Intelsat had ordered before SES bought the company. A month earlier France’s Eutelsat cancelled a third, to free up cash for its low-orbit OneWeb network [51]. All three were geostationary satellites — the school-bus-sized kind, parked 36,000 km up over one fixed spot on Earth, costing around $300 million each on the launchpad.

Those giants are the bedrock of the space insurance market. Operators insure them before launch, and over the past decade that produced roughly $500 million a year in premiums — the steady income that keeps the whole pool solvent [51]. Cancel the satellites, and the premiums vanish with them.

A pool only works if enough people pay in

Insurance is a shared pot. Many operators pay premiums; the unlucky few who lose a satellite get paid out of the pot. It holds as long as the money coming in roughly covers the rare, large losses going out.

The space pool is thin. In 2023, claims came in at about three times the entire annual premium pool — a single bad year wiped out roughly three years of income, and several underwriters simply quit [51]. The market has been in what one Aon broker called “cautious and considered recovery” ever since: fewer insurers, higher prices. A profitable 2024 helped; a $400 million claim last December clawed much of 2025’s gains back [51]. This is a small pool absorbing very large, very rare shocks — and the steady premiums from those GEO giants are what let it survive the bad years.

The new space doesn’t pay in

Here is the trap. The industry is shifting from a few huge satellites to swarms of small ones — low-orbit constellations like Starlink and OneWeb, plus a new generation of cheap geostationary craft “closer to the size of a dishwasher” than a school bus [51]. That shift is the whole growth story. It’s why launches are cheaper and why your phone may soon connect to a satellite.

But the new fleets barely insure anything. Setting aside Starlink, which famously refuses insurance entirely, only about 5–7% of low-orbit satellites are covered at all, against roughly half of geostationary ones [51]. The economics are different too: once you have thousands of cheap satellites, losing one doesn’t matter — you launch a spare. The thing worth insuring stops being the satellite and becomes the whole constellation and its revenue, a product the traditional market wasn’t built to sell [51].

So the part of the industry that’s growing fastest is the part that pays least into the pool — while the part being abandoned is the part that funded it.

Why this reaches further than insurers

Insurance is not just a cushion against losses. It’s also a key that unlocks money. Smaller space companies use coverage to convince conservative banks and institutions — which still treat space as exotic — to lend them larger sums [51]. A thinning insurance market makes that key harder to turn, exactly as a thousand new ventures try to raise cash off the back of the SpaceX listing. China’s space startups are already racing to copy the playbook and go public, several of them ahead of any real revenue [8]. And the harder, stranger risks coming next — commercial space stations, lunar bases, in-orbit operations — will need insurers far more sophisticated than today’s launch market [51]. One broker put it bluntly: leaning only on the old GEO business is now “a structural risk to the overall health of the insurance industry” [51].

Elsewhere this week

Japan’s H3 rocket returned to flight on June 11, its first launch since a failure last December [77]. It flew a new three-engine, no-booster configuration and carried six small satellites, including the first non-Japanese-built spacecraft ever to ride the H3 [77]. Europe’s ESA also signed a €700 million ($810 million) deal with Thales Alenia Space — one of the firms whose cancelled orders sit at the heart of this story — to build the next generation of its Sentinel-1 radar satellites for Earth observation [43].

And the James Webb Space Telescope, NASA’s big infrared observatory, spotted a “galaxy-killing” wind: powerful outflows of gas streaming out of massive young galaxies just after the Big Bang [10]. Astronomers think it may explain why some giant galaxies stopped forming stars so early — they appear to have blown out their own star-making fuel. A finding, not yet a settled rule, but a clue to why some galaxies lived fast and died young [10].

02 · Lesson · why it matters

The boring thing was paying for the exciting thing

Many systems are quietly held up by a dull, reliable part that funds the rest — and when everyone rushes to the version that skips it, the floor under all of them thins out.

A small pot, holding up a big sky

Space insurance is a tiny business doing an enormous job. Across the whole industry, the giant geostationary satellites — the school-bus-sized ones parked far above Earth — bring in roughly $500 million a year in premiums. That is the pot. When a rocket fails or a satellite dies, the unlucky operator gets paid out of it.

The pot is small for the risk it carries. In 2023, claims came in at about three times the entire year’s premiums. One bad year wiped out three years of income, and several insurers just walked away.

So the whole thing balances on a knife edge. It only works because, year after year, the operators of those big reliable satellites keep paying in — covering the rare, expensive disasters of everyone else. The boring, predictable premiums are what let the pot survive the spectacular losses.

The reliable payers are leaving

This past week, three of those big satellites got cancelled before they were ever built. The operators are moving their money to something newer: swarms of small, cheap satellites in low orbit — the kind that beam internet to remote places. That shift is the industry’s whole growth story, and it’s why launches keep getting cheaper.

But here is the quiet problem. The new swarms barely buy insurance. Set aside Starlink, which refuses it entirely, and only about 5 to 7 percent of low-orbit satellites are covered at all — against roughly half of the big geostationary ones.

The reason is sensible from each company’s own seat. When you own thousands of cheap satellites, losing one doesn’t hurt. You launch a spare. Why pay to insure something you can replace for pocket change? Every operator makes that call on its own, and every call is reasonable.

Add them up and you get something nobody chose: the fastest-growing part of the industry is the part that pays least into the pot, and the part being abandoned is the part that funded it.

The shape of the trap

This is the pattern worth carrying out of today’s news. A shared pool — insurance, but also a tax base, a pension system, a power grid’s reserve capacity — only holds up if enough of the steady, reliable payers stay in it. The pool protects everyone, including the people who don’t pay much. It can absorb that, as long as the dependable contributors keep contributing.

Then a cheaper, smarter option appears that lets people opt out of paying in while still enjoying a world the pool makes possible. Each person who leaves is acting rationally. None of them is trying to break anything. But the pool was never funded by good intentions — it was funded by the boring payers. Take enough of them out and the floor thins for everyone still standing on it, including the ones who left.

The trap is that the damage is invisible from any single seat. The company dropping insurance sees only a saved premium. It does not see the pot shrinking, the price rising for the firm next door, the underwriter quitting. No one in the system is doing anything wrong, and the system gets weaker anyway.

Who else is standing on this floor

It is tempting to file this under “a niche insurance problem” and move on. It isn’t, because the same thinning floor reaches people far from any satellite.

The small space companies, for one. Insurance isn’t only a cushion against losses — it’s a key that unlocks money. A startup uses coverage to convince a cautious bank, which still thinks of space as exotic, to lend it real cash. A thinner insurance market means a key that’s harder to turn — and that bites hardest right now, as a wave of new ventures tries to raise money off the back of the giant SpaceX listing. The harder risks coming next — space stations, lunar bases — will lean on this market even more.

And you are standing on a version of this floor too. Your home insurance, your country’s health pool, the deposit guarantee on your bank account — each is the same shape: a pot that protects you because enough steady payers stay in. You did not choose its terms, and you mostly don’t notice it. You only feel it when the reliable payers start leaving — when premiums jump, or a pool that always covered the rare disaster suddenly can’t.

What the whole looks like

The thing that’s failing here is not a company or a technology. It’s a quiet arrangement nobody designed and nobody is defending — the dull, dependable part that was holding up the exciting part, drained one rational decision at a time.

That is the humbling part. From inside the system, almost no one can see it happening. The operator sees a saved cost. The investor sees a record IPO. The broker sees one fewer client. Each is looking at a true, small thing, and none of them is looking at the pot. The whole only becomes visible after the floor has already thinned — which is exactly when it’s hardest to put back. Worth holding loosely, then, the next time a clever new option lets you skip paying into something you’d forgotten was protecting you.

03 · Lab · your turn

The Pool

Rehearse the choice to pay into a shared insurance pot or save the premium and go it alone, and feel how everyone's rational opt-out thins the floor under all of them.