Now is an exciting time for the UK space industry, with the announcement that a date has been set for the first ever orbital satellite launch from UK soil, due to take place next week. The launch is a key step in realising the ambitions of the National Space Strategy and, behind the scenes, the regulatory landscape has had to adapt rapidly to accommodate the expansion of the industry in this way, with the introduction of the Space Industry Act 2018, and its associated regulations following in 2021.
Now, more legislative and policy changes are on the horizon - back in June, the Government published its response to a number of key liability and insurance issues raised by industry in a series of consultations, primarily concerning:
- in-orbit operator liability limits; and
- alternatives to third party liability insurance.
The intention was that, following publication of the response, the Government would work in conjunction with sector stakeholders to develop a formal set of proposals for further consultation. The response indicated that these proposals would be published in late 2022 or early 2023 and, assuming this activity is still on schedule, we should see that output imminently.
So what changes can we expect to see in the formal proposals when they arrive? Based on the Government’s consultation response, the key points are likely to include:
In-orbit operator liability limit
Variable Limit on Liability
In response to clear support from industry, the Government has proposed a move from the current fixed €60m operator liability limit to a variable limit, where risk is assessed on a case by case basis using a selection of pre-defined outcome criteria, with missions placed into one of a limited number of liability bands with a maximum recommended value of £50m. A range of fixed minimum required insurance values would then be set to reflect each band
The Government is also exploring whether it is appropriate to expand its waiver of insurance policy, currently only applied to the lowest risk satellites operating below the International Space Station (ISS), to include a wider set of circumstances in which a waiver could be applied, with the aim of supporting growth and innovation in the sector.
The Government has also confirmed that, in line with its policy that operator liability to indemnify the government in respect of third party claims will always be limited, it will explore options for amending section 12(2) of the Space Industry Act 2018 to make it clear that the limit on liability is mandatory not optional, giving prospective licensees the comfort that the policy on capping liability has legislative weight.
Euros to Pounds
The Government has also confirmed its intention to implement the proposed change to set orbital operator liability limits in Pounds sterling rather than Euros, with insurance purchased in non-sterling currencies assessed against the requirement using the Bank of England exchange rate on 1 April.
Alternatives to insurance
Alternative insurance models
The review also considered industry views on alternatives to the traditional method of insuring for third-party liability in light of suggestions made in response to earlier consultations relating to establishing an industry mutual approach. This would involve a not-for-profit operator-owned and run mutual to provide an insurance facility, the aim of which would be to increase the availability of and reduce the cost of insurance, in particular for operators of small satellites.
This proposal gained significant support from the sector (despite insurers perhaps unsurprisingly voicing concerns as to the viability of the approach) and, as such, is one of the options the Government stated it was planning to explore further, along with looking at the potential for a collective insurance policy for the whole sector involving a single policy to cover all licensees, and in the longer term, a government Space Bond which operators would be required to invest in as a licence condition in order to establish a resource to meet liability claims.
Watch this *space* for more updates when the formal detailed proposals on liability and insurance are released.