Gift Policy Insured Teacher for $1 Million
Although all seven crew members aboard the space shuttle Challenger had signed routine waivers absolving the government of liability in the event of their deaths, schoolteacher Christa McAuliffe was covered by a $1-million life insurance policy presented to her as a gift by a firm that insures communications satellites.
No insurance covered the loss of the $1.2-billion spacecraft or the $100-million satellite and $10-million Halley’s comet monitoring equipment it carried, NASA spokesman Dick Young said. Those losses will be absorbed by the government.
McAuliffe was presented with the insurance policy just last week, in honor of her role as the nation’s first private citizen to participate in a space mission, said Gail Granato, an assistant vice president with Corroon & Black Inspace Inc., the firm that made the gift.
“We did it to say ‘thank you,’ ” Granato said.
Although similar policies, obtained through the Lloyd’s of London insurance exchange, have been available to all who fly shuttle missions, no one has bought the coverage since the first two missions, she said.
“The crew signed a total waiver,” Larry Little, a spokesman for the Aviation Office of America, a major space-insurance underwriter, told United Press International. “That means everybody pretty much gives up liability rights against anybody else.” However, the waiver would not have precluded any of the crew members from obtaining their own insurance.
Little said that signing such a waiver is not unusual. “There are high risks involved,” he said. “It only makes sense to clear up the liability question.”
Loss Not Covered
Corroon & Black Inspace provides liability insurance for Space Communications Co., the Gaithersburg, Md., firm that built the lost communications satellite and leased it to the National Aeronautics and Space Administration, Granato said. But that policy, required by NASA of all its contractors, covers only injuries relating to the satellite and not loss of the satellite itself.
The satellite--known as the Tracking and Data Relay Satellite B--was to be part of a NASA tracking and relay system that would have eliminated the need for a complex series of ground stations to relay information to and from orbiting spacecraft.
Although the satellite was not privately insured, its loss is sure to make future insurance coverage more costly. Premiums have already been rising as a result of a string of losses and malfunctions involving seven satellites in the last 22 months. Since 1984, claims for losses have caused rates to soar from about 5% of value to as much as 30% as carriers cut back on the amount of risk they are willing to assume.
“Over the last 10 years, insurance losses paid on satellites totaled about $900 million,” said John P. McCann of the Insurance Information Institute, a trade organization. “Premiums paid to insurers were $400 million.”
Robert J. Tirone, a vice president of Alexander & Alexander, an international insurance brokerage firm based in New York, warned a congressional committee last Oct. 31 that, in the face of such a string of losses, there is “a grave risk” that insurers may end their participation in the space program. He told Associated Press on Tuesday that the Challenger disaster “has got to have an impact on our opinion of our ability to get things up in the sky.”
Whether the industry boosts rates even higher or abandons space insurance “is going to depend quite a bit on NASA’s ability to find out what happened,” Tirone added.
