Guidance

Commercial spaceflight: launch liabilities and insurance

Published 27 September 2021

Liabilities and Insurance requirements set out in the Space Industry Act 2018 and associated regulations will help enable commercial spaceflight and associated activities to take place from the UK.

This legislation and the associated guidance create the conditions for horizontal and vertical launches from UK spaceports and continued licensing of orbital activity.

Liability for activities licensed under the Space Industry Act

Launch operators will not face unlimited liability for activities carried out in compliance with licence conditions and the Space Industry Act.

All operator licences issued under the act will include a limit of operator liability with respect to sections 34 and 36.

The government’s indemnity for any claims above the limit of operator liability will not be limited and will cover any compensation claimed above the operator’s limit of liability.

While section 12(2) of the act states that operator licences ‘may’ include a limit of liability, limits of operator liability will be included in all operator licences (PDF, 1MB) with respect to liability arising under section 34 and section 36 of the act.

In addition, regulation 220 specifies that all operator licences must include a limit of operator liability with respect to liability under section 34 of the act. Ministers have reaffirmed this position in Parliament.

What the Space Industry Act says on limiting liability

The Space Industry Act states that licences ‘may’ contain a limit of liability. This has not been changed to ‘must’ contain a limit of liability, because changing the act will require primary legislation. In this case, it is not possible to make such a change through regulations such as the Space Industry Regulations 2021.

If a suitable opportunity arises to make a change to the wording, we may seek to do so. The act will be kept under review over the coming years.

It should be noted that such a change will not make a practical difference to operator liability, because it is government policy that all operator licences issued under the act will include a limit of operator liability. No further legislation is required to bring this policy into effect.

We will establish a committee involving industry and the spaceflight regulator to monitor and review the regulations and ensure they remain current, relevant and effective.

How launch insurance requirements and limits will be set

The insurance requirements for launch will be set using the Modelled Insurance Requirement (MIR) model, which is similar to the Maximum Probable Loss (MPL) model used by the US.

The MIR approach will tailor the amount of insurance requirements and limit of operator liability to the risk and diverse range of UK launch activities today and anticipated in the future, reducing cost, in general, compared to a fixed limit.

Limits of operator liability will be set, in general, at the same amount as the calculated MIR value.

Government has not set an upper launch liability limit for the following reasons:

• based on modelling, we anticipate that the limit as determined by the MIR will be lower in most cases than a fixed limit of, for example, €60 million, as used in other countries for launch

• setting an upper limit in legislation would reduce the flexibility of the UK’s licencing regime and make it less internationally competitive, as the limit in other nations may change over time

• safety is at the heart of the Space Industry Act. A flexible liability limit encourages and rewards operators for reducing the risk associated with their launch activities

• we currently do not have any evidence to justify placing an upper limit on the MIR or at which level such a limit should be set. We will consider whether an upper limit of liability is justified and, if so, the level at which such a limit should be set after the first launches have taken place from the UK when suitable evidence will be available

Specifying the level of launch operator liability limits in regulations

We will not be specifying the level of launch operator liability limits in regulations. The disadvantage of doing so is that the risk profiles for different types of launch can vary and, therefore, a single limit may not be suitable for every launch, particularly launches that would be below that limit.

By applying liability limits administratively, we can ensure that government can respond to changing market conditions and emerging technologies to tailor the liability limit to the risks associated with the particular mission.

We’ve chosen to use a MIR approach rather than set a fixed limit as used by other countries, such as France, to incentivise and reward operators for reducing the risk associated with their launch.

Our modelling indicated that using a MIR approach should lead to lower insurance requirements compared to applying a flat rate requirement in line with that applied by some other launching nations.

The factors that MIR takes into account

MIR will be based on the assessment of the safety case and reflect the associated risks of a launch.

The MIR calculation will take into account:

• a full range of reasonably foreseeable accidents
• a range of factors that account for variations in potential third-party damage that could be caused, such as:​
  • geographic location of launch ​
  • launch operation type
  • launch vehicle type ​
  • time of year
  • launch trajectory

How the MIR is modelled

The MIR will be modelled on various factors including:

• the major accident hazards identified by the applicant in the safety case for each phase
• the calculation of the MIR taking place in 3 stages
• identifying major accident scenarios​
• mission phase risk assessment​
• insurance requirement determination​
• different types of damage are included (for example, personal injuries, property damage and environmental damage)​

Further information

Our policy on liabilities and insurance and further information on how the approach was developed can be found in:

• Insurance requirements and liability for licences | UK Civil Aviation Authority
• Space Industry Regulation 2021
• Space Industry regulations consultations: summary of views and government responses (PDF, 1MB)
• Spaceflight legislation and guidance
• Liability and insurance consultation

The Department for Transport is responsible for launch regulatory policy, while the UK Space Agency and Department for Business, Energy and Industrial Strategy are responsible for orbital regulatory policy.

The CAA is the independent spaceflight regulator and will calculate insurance requirements and cap liability in line with government policy.

Contact

If you have further questions, please email the relevant team:

• for launch insurance and liability, contact [email protected]
• for orbital insurance and liability, contact [email protected]
• for licensing, contact [email protected]