Space tourists don't have to take out extra insurance cover due to loophole
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Adventure travelers hoping to head into space don't have to take out extra life insurance ahead of their trips.
Private pilots and skydivers have to take out extra life insurance to cover the added risk of their pursuits... but space tourists don't need special policies for their high flying rides.
However, that loophole is likely to disappear, slowly, after the fatal crash last week of a test flight for a space ship designed to take tourists into space.
The main wreckage from the crash on Friday that killed one pilot and injured another is spread over a five-mile area in the Mojave Desert in California
These images show the Virgin Galactic SpaceShipTwo rocket separating from the carrier aircraft, left, and then disintegrating, right, during a test flight on Friday
Michael Alsbury (left) was killed in the crash on Friday, while co-pilot Peter Siebold (right) survived
The loophole exists because US life insurance policies don't ask about space tourism or exclude it from coverage, meaning insurers most likely would have to pay if the holder died on a space trip, insurance industry veterans said.
Insurance companies, which say they are considering what to do about space tourists after the Virgin crash, are likely to start adding questions about space travel and may even explicitly exclude space coverage, the industry observers said.
The companies themselves are taking a cautious approach.
'If we had an applicant with such plans, we would postpone any underwriting decision until they returned,' Prudential spokeswoman Sheila Bridgeforth said.
Northwestern Mutual said that it is paying close attention to the issue after the crash, but that there is too little safety data to assess the risk of space tourism.
US life insurer MetLife said it doesn't have imminent plans to offer space tourism insurance.
Still, the industry is starting to gear up for space tourists, just as they cover satellite launches.
Pembroke Managing Agency offers a policy that pays up to $5 million (£3.1 million) per space passenger or up to $20 million (£12.5 million) per trip, according to parent Ironshore International, which announced the policy in June.
'I suspect in insurance company offices all over the country right now - as a result of what's happened to the Virgin Galactic plane - it's being discussed,' said Burke Christensen, former insurance lawyer and chief executive who has authored or edited three textbooks on insurance law.
It would take time, perhaps years, for those changes to be approved by all U.S. state insurance commissioners, he noted.
In deciding what to charge, insurers are likely to look at satellite policies, which range between 2.5 per cent and 10 per cent of insured value, Neil Stevens, a space insurance expert and member of the UK's Satellite Finance Network advisory board.
At that rate, a policy paying a million dollars would cost $25,000 (£15,600) to $100,000 (£62,550).
'Getting on a space flight is a material change in risk,' he said, akin to strapping rocket boosters onto a car and asking for a new policy.
'Put yourself in the place of the insurer. Would you charge the same premium?'
But the data on human space travel is much more favorable, if limited.
There have been no fatal suborbital manned flights and three fatal orbital space shots, including the US space shuttles Challenger and Columbia with 14 deaths, and a Soyuz flight that killed one, according to the Seradata SpaceTrak database.
The fatal Virgin Galactic disaster means life insurance companies could explicity exclude space tourism
That puts the risk of fatal accident on a manned orbital or suborbital spaceflight at three in 306 or just under one per cent, the company said.
Given those numbers, and the few people who are likely to fly on rockets, 'you come up with a very, very, tiny, tiny probability' of death, Christensen said, and the company might conclude it is not worth charging extra.
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