Why space tourist loophole in life insurance may end

NEW YORK - While private pilots and skydivers have to take out extra life insurance to cover the added risk of their pursuits, space tourists do not need special policies on their high flying rides.

That loophole is likely to disappear, slowly, after the fatal crash last week of a test flight of a Virgin Galactic space ship designed to take tourists into space.

The loophole exists because U.S. 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. U.S. life insurer MetLife said it doesn't have imminent plans to offer space tourism insurance.

Still, the industry is starting to gear up for sparce tourists, just as they cover satellite launches. Pembroke Managing Agency offers a policy that pays up to $5 million per space passenger or up to $20 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 percent and 10 percent 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 to $100,000.

"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 U.S. space shuttles Challenger and Columbia with 14 deaths, and a Soyuz flight that killed one, according to the Seradata SpaceTrak database. That puts the risk of fatal accident on a manned orbital or suborbital spaceflight at 3 in 306 or just under 1 percent, 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.

RISKY BUSINESS

Virgin Galactic's SpaceShipTwo broke up after its release from a launch plane high over the Mojave desert on Oct. 31, killing one of two pilots. The craft is designed to carry six passengers on two-hour suborbital flights, including a few minutes of weightlessness.

Virgin's space program, backed by founder Richard Branson and Aabar Investments, a United Arab Emirates investment fund, is the most developed of several projects to develop space tourism, with about 800 deposits for a ride into space at up to $250,000 a seat. Singer Lady Gaga and actor Ashton Kutcher have signed up.

Other companies developing space ships include privately owned XCOR Aerospace and Blue Origin, a startup owned by Amazon.com Inc founder Jeff Bezos.

While current life policies probably would pay in the event of death, applicants for new policies should disclose space plans or risk a dispute with an insurer, said Steven Weisbart, chief economist at the Insurance Information Institute, a non-profit trade association.

Insurers typically have up to two years after a policy is written to contest the application, allowing them to investigate whether the insured person has misrepresented facts.

So it's possible an insurer could avoid paying if someone bought a policy and died in a rocket crash during the two years period.

"You know that insurers are going to look for some way to invalidate the claim if you had a ticket," said Glenn Daily, a fee-only insurance adviser based in New York

source: www.abs-cbnnews.com

Branson determined to find cause of Virgin spaceship crash

MOJAVE, Calif./CAPE CANAVERAL, Fla. - Billionaire entrepreneur Richard Branson on Saturday vowed to find out what caused his space tourism company's passenger spaceship to crash during a test flight, killing one pilot and injuring the other, but expressed a desire to press on with the dream of commercial space flight.

Michael Alsbury, 39, has been identified as the pilot who died in the crash of Virgin Galactic SpaceShipTwo, and the surviving pilot is Peter Siebold, 43, the Kern County Sheriff's Office said in a statement.

Branson arrived in California's Mojave Desert to meet his Virgin Galactic team and federal officials who were opening their investigation into Friday's accident, the second in less than a week involving a commercial space company.

Virgin Galactic's SpaceShipTwo went down during a powered test flight, scattering debris over the Mojave Desert, 95 miles (150 km) north of Los Angeles.

"We owe it to our pilots to find out exactly what went wrong," Branson said during a news conference in Mojave.

"If we can overcome it, we will make absolutely certain that the dream lives on," he said.

Alsbury, who a sheriff's spokesman said was from Tehachapi, California, was a project engineer and test pilot at Scaled Composites, a Northrop Grumman Corp subsidiary that built and designed the spacecraft for Virgin Galactic.

Siebold was piloting SpaceShipTwo on Friday and Alsbury was serving as co-pilot, Scaled Composites said in a statement.

Alsbury was flying for the ninth time aboard SpaceShipTwo, including serving as the co-pilot on its first rocket-powered test flight on April 29, 2013, according to his biography on the company's website.

He was found dead in the aircraft, Kern County Sheriff Donny Youngblood said on Friday.

Siebold parachuted from SpaceShipTwo and was found a mile from the fuselage, Youngblood said. He had moderate to major injuries and was taken by helicopter to Antelope Valley Hospital, the Sheriff's Office said in a statement.

He was alert and talking with his family and doctors on Saturday, the statement from Scaled Composites said. He had been the pilot alongside Alsbury on SpaceShipTwo's maiden test flight last year, according to the company's website.

A team of investigators from the National Transportation Safety Board arrived at the crash site on Saturday to begin piecing together what led to the accident.

"This was a test flight, and test flights are typically very well documented in terms of data," said Christopher Hart, acting chairman of the NTSB. "We may have lots of evidence that will help us with the investigative process," he said.

Friday's crash was the second disaster in less than a week suffered by a private space company, dealing a blow to the fledgling commercial space industry that has been taking on work traditionally done by governments.

On Tuesday, an Antares rocket built and launched by Orbital Sciences Corp exploded after liftoff from Wallops Island, Virginia, destroying a cargo ship bound for the International Space Station.

NEW TYPE of FUEL

The Virgin probe will likely focus on SpaceShipTwo's rocket engine, which on Friday was flying with a new type of fuel for the first time, experts said.

The solid plastic-type propellant is ignited by nitrous oxide, commonly known as laughing gas.

Virgin Galactic announced in May that it was replacing the rubber-based propellant used during the spaceship's three previous rocket-powered test flights to get better performance.

"We've tested both of these fuel grains a lot," Virgin Galactic chief executive George Whitesides told Reuters at the time.

Before Friday's flight, SpaceShipTwo's last powered test flight was in January, though the rocket and its new propellant had passed multiple ground tests.

Virgin Galactic is a U.S. offshoot of the London-based Virgin Group founded by Branson, one of the world's most famous entrepreneurs whose business empire ranges from airlines to music stores and mobiles phones.

Friday's accident marked the fourth fatality in Scaled's SpaceShipTwo development effort. In 2007, a fuel tank exploded, killing three Scaled employees.

"While not a NASA mission, the pain of this (new)tragedy will be felt by all the men and women who have devoted their lives to exploration," NASA, the U.S. space agency, said in a statement.

(Additional reporting by Victoria Cavaliere in Seattle and Curtis Skinner in San Francisco, Writing by Alex Dobuzinskis,; Editing by Jeremy Gaunt and Chizu Nomiyama)

source: www.abs-cbnnews.com