XPRIMM: How do you assess the current state of the space insurance market?
Pavel SHUTOV: The insurance rates for space risks are at a low level, sometimes unreasonably low.This tendency is especially observed for the space technology of foreign manufacture.

The decline in rates occurred systematically over the past 5-10 years and it is caused by relatively small accident rates and excess of capacity for that business. In other words, a high number of competitive companies provide capacity for re/insurance of space risks.

Currently, the rates are stable at a low level, practically "at the bottom" and a further decline should not be expected. At the same time, any accident leading to large payments may provoke the sharp increase of rates in order to compensate the losses of insurers.

XPRIMM: How much do rates depend on previous claims?
P.S.: Currently, on the Russian market there are significant differences in pricing for different launch vehicles, depending on producers. Now, for example, rates for a Soyuz launch are several times smaller than for the launch of a Proton vehicle. Earlier, the rates were roughly at the same level. This tendency can be explained by years of successful launches of Soyuz and a high accident rate of Proton.

At the same time, we expect an increase in insurance rates for orbital spacecraft operations for Russian manufacturers due to their failure in 2015. Moreover, we expect to receive insurance payments for devices EgyptSat and Amos-5, the Russian manufacturers.

Regarding the insurance rates for the risks related to space activities (third party liability during the launches, insurance of space technology during transportation, installation, training, testing, etc.) - they remain at the same level for now, but are expected to decrease.

XPRIMM: Is it a profitable business?
P.S.: Favorable or unfavorable - this business is highly dependent on the underwriting policy of each insurer. Some insurers, due to high losses in their portfolio, withdrew from the space insurance business. Some, despite the crash of space technology, achieve profitability through portfolio balance and competent reinsurance strategies.

XPRIMM: How much are the Russian accidents pushing up reinsurance rates abroad?
P.S.: It is obvious that in other segments of the insurance business, the statistics of accidents and losses affect the increase of reinsurance rates. The calculations of re/insurance rates are especially affected by the investigations regarding the causes of an accidents.

For example, if the conclusion of an investigation doesn't completely identify the causes of the accident and doesn't discover how to avoid future failures, the insurance market increase the rates.

XPRIMM: How do the western underwriters evaluate the Russian space risks?
P.S.: This question is more for the western underwriters. But we are aware of the problems: lack of understanding of the Russian tender system selecting insurers for space risks and the methods of financing space insurance; also, the excessive lack of transparency of the Russian space industry and the difficulties in obtaining full informations about the risks. Last but not least, the short time which is given to insurers to analyze the risks and the absence of long term insurance programs are challenging.

XPRIMM: Are there any problems regarding the placement of reinsurance of Russian space risks abroad?
P.S.: Given the fact that the available reinsurance capacity for space risks is excessive, usually, there are not encountered any problems. In addition, there were alternative reinsurance capacities for space risks. For example, Chinese reinsurance companies have become actively involved.

The international sanctions have born only one significant problem in placing the reinsurance space risks on traditional Western and American markets. Namely, these are the risks associated with military space technology, technology with dual-use or the risks accepted from the manufacturers, which were included on the"sanctions' lists". Thus, reinsurance of such risks is carried out by Russian companies and on alternative insurance markets, which are not influenced by the sanctions.