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Satellite Owner Says SpaceX Owes $50 Million Or Free Flight (reuters.com)
An anonymous reader quotes a report from Reuters: Israel's Space Communication Ltd said on Sunday it could seek $50 million or a free flight from Elon Musk's SpaceX after a Spacecom communications satellite was destroyed last week by an explosion at SpaceX's Florida launch site. Officials of the Israeli company said in a conference call with reporters Sunday that Spacecom also could collect $205 million from Israel Aerospace Industries, which built the AMOS-6 satellite. Spacecom has been hit hard in the aftermath of the Thursday explosion that destroyed the SpaceX Falcon 9 rocket and its payload. The Israeli company said the loss of the satellite would have a significant impact, with its equity expected to decline by $30 million to $123 million. Spacecom shares dropped 9 percent on Thursday, with the explosion occurring late in the last trading day of the week. Trading in the shares was suspended on Sunday morning, and the stock plummeted another 34 percent when trading resumed. In a conference call with reporters, Spacecom's general counsel Gil Lotan said it was too early to say if the company's planned merger with Beijing Xinwei Technology Group would proceed. Xinwei last month agreed to buy Spacecom for $285 million, saying the deal was contingent on the successful launch and operation of Spacecom's AMOS-6 satellite. The $200 million AMOS-6 satellite that perished in the explosion belonged to Facebook and was going to be used to beam internet to developing parts of the world.
Launching doubly so. OK this was a ground test of the engines. We still don't know what caused the explosion.
And hey, wasn't the satellite INSURED??
Political debates have me rolling my eyes so much I think I got optical whiplash. I should sue. - Foamy The Squirrel
What's with these summaries? Facebook had nothing to do with the spacecraft, other than the fact that they had an agreement in place to lease a significant portion of the Ka-Band transponders on the satellite.
...si hoc legere nimium eruditionis habes...
When someone cracks your egg, remember there ain't no such thing as a free launch.
The cost of insurance is (expected-loss + insurance-company-overhead + insurance-company-profit). If you self-insure, it is just the expected loss.
Not true. The cost of insurance is (expected loss * probability of loss + insurance company profit / overhead). The cost of self insuring is either 0 or the expected loss. It only makes sense to self insure if you have a large number of things that you can average the risk over. It's also often a good idea to take a middle path. For example, the university that I work for gets a good deal on travel insurance, because the underwriters only have to cover very rare (and expensive) payouts. For smaller things, the university covers them itself out of overhead - these things are small and (averaged over all of the staff and students that qualify for the insurance) statistically easy to predict. They know roughly how much the payouts are going to be each year and budget for it. It wouldn't make sense to pass this onto an insurer, because we'd be paying them more than we're getting back. For particularly unusual events, we are covered, because then we average the risk not just among our own staff and students, but among the other tens or hundreds of thousands of people covered by the underwriter's policy. We will, on average, pay more than we get back, but in any given year we might get a lot more back than we pay and it's far easier to budget for that.
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Actually, it's simpler than that. If you have one, insure; rare failures mean insurance is cheap, and frequent failures mean you're taking a bad gamble trying to dodge that hefty premium. If you have one thousand, self-insure; you're approaching risk parity with general population, and insurance would have a lesser stabilizing effect.
Self-insurance doesn't really just save you money. In theory, it's marginally-cheaper than buying insurance; and in practice, many insurance companies charge below-cost premiums to buy an opportunity (you're trying to transfer a threat). Progressive Insurance Co., for example, charges $0.96 in premiums for every $1 paid out; they have an income of $1.02 for every $1 paid out because they buy stable investments and collect interest.
Even without that, you have the risk of coming in a standard deviation lower (opportunity: your failure rate is slightly-lower than average and saves you money) or higher (threat: your failures are frequent, and cost you money). When you have few repeatable risk events (e.g. one car), the difference is 100% of cost, often lopsided (e.g. the cost of insurance is 1% of cost). When you have many repeatable risk events (e.g. a fleet of cars), the difference is in a much narrower range, centered more closely around the cost of insurance (e.g. you can expect to pay 0.98%-1.02% versus insurance). Self-insurance is riskier than insurance, and avoids the cost of logistics to manage insurance, while providing opportunities (e.g. you can skip warranty service for a computer fleet and instead self-insure, and self-build, possibly saving costs if your IT helpdesk is frequently underutilized and has time to replace hard drives or upgrade components).
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The point is: SpaceX is cheaper than other space transport systems because it doen't sell you an insurance. When we compare SpaceX launch cost with (e.g.) ESA launch cost, we compare launch cost against launch and insurance cost.
Launch insurance is bookkept separately from launch cost. And you buy it from insurance companies. It typically costs five or six percent of the launch cost, depending on launch vehicle. http://www.cnbc.com/2016/09/01...