The idea of data center satellites, designed to overcome Earth’s power limitations, has gained increased interest since Musk presented them as pivotal for the future of artificial intelligence development ahead of SpaceX’s historic public listing this month. Obtaining insurance is essential for firms seeking to transition orbital data centers from theory to practice. Without protection for the expensive hardware and associated risks, securing the necessary debt financing to expand these initiatives would prove challenging.
Blue Origin and various space startups, including Orbital, Starcloud, Lonestar Data Holdings, and Cowboy Space, have indicated their plans to establish space-based data centers.
Reuters interviewed four brokers and underwriters, along with three space companies, confirming that preliminary discussions about coverage for orbital data centers have taken place.
Insurance broker Marsh noted that several companies have sought insight from insurers regarding potential future coverage for orbital data centers, although the specific firms were not disclosed.
“We’re beginning to see companies focused on data centers and digital infrastructure reaching out to the insurance community for assistance,” stated Patton Kline, U.S. leader of aviation and space practice at Marsh.
Lonestar mentioned it recently conducted a briefing at Marsh’s offices for Lloyd’s of London, which was attended by approximately 25 insurers.
SpaceX and Blue Origin did not respond to inquiries for comment.
ORBITAL AI NEW FOR INSURERS
Insurers currently cover launch failures, satellite issues, orbital debris, and space weather in a global space market that generates approximately $500 million in annual premiums, according to industry leaders and insurance firm Axa XL.
However, while insurers have extensive experience in covering satellites, they lack sufficient data on orbital AI infrastructure.
“Discussions in the market primarily focus on whether the risk can be modeled, rather than on determining the premium,” remarked Kasey Roh, U.S. head of Upstage AI, which develops AI solutions for insurance firms.
A significant challenge lies in valuing rapidly evolving AI chips, which may be susceptible to extreme conditions in space, according to Orbital CEO Euwyn Poon.
David Wade, a space underwriter at Atrium, stated that venture-capital-backed startups would need to grow significantly before a substantial insurance market for orbital data centers can develop.
“Until we move beyond this initial financing phase and start witnessing these companies expand through debt financing, I believe the insurance needs are quite limited at present.”
