SpaceX, led by Elon Musk, and Blue Origin, founded by Jeff Bezos, are betting on orbital computing, with plans to deploy data centers into space.
Patton Kline, head of U.S. aerospace at Marsh, stated that if insurers overlook this new underwriting area, they will miss a significant growth opportunity. Expanding coverage to orbital data centers creates a series of challenges around regulatory rules, underwriting capacity, and risk pricing.
On Earth, the boom in data center construction is reshaping power grids, building markets, and corporate capital expenditure. Now, major tech and space companies aim to move some computing infrastructure into orbit. This opens a new frontier for the insurance industry, but only if it can find ways to price the risks of this yet-to-be-scaled new asset class.
SpaceX has proposed the most ambitious plan. In January, it filed with the U.S. Federal Communications Commission to deploy a constellation of up to 1 million satellites to create orbital AI data centers. Musk believes that with falling launch costs and rising terrestrial electricity prices, solar-powered space computing facilities could achieve operating costs lower than ground-based data centers within two to three years.
Bezos also sees potential in orbital computing, though on a longer timeline. In March, his space venture Blue Origin disclosed plans to deploy 51,600 satellites with data center functions in low Earth orbit. In a May interview, Bezos called the space data center concept "highly viable" but described the two-to-three-year timeline as "a bit aggressive."
Google is advancing "Project Suncatcher," building a network of interconnected solar-powered satellites equipped with its own AI chips. Startup Starcloud has successfully launched an Nvidia H100 GPU into orbit for testing. If these plans materialize, deploying hundreds of billions of dollars in hardware assets in space will require insurance coverage as an essential component.
"If insurers only underwrite terrestrial assets and don't see space as the next core underwriting frontier, they will miss a major growth opportunity," said Patton Kline, head of U.S. aerospace at Marsh. Kline noted strong interest from both insurers and clients. Globally, about 30 insurers specialize in space insurance, generating annual premiums of around $500 million to $750 million. This is negligible compared to the coverage needed for future trillions of dollars in orbital computing infrastructure.
Kline believes orbital computing insurance is an extension of the existing space insurance market, which has covered rocket launches and in-orbit satellites for decades. This risk also has a low correlation with terrestrial catastrophes like hurricanes and earthquakes, offering diversification benefits. However, expanding the market to cover orbital data centers faces significant hurdles.
Space Market: An Unregulated 'Wild West'
Andreas Berger, CEO of global reinsurance giant Swiss Re, said space data centers combine two high-growth risk areas: AI infrastructure and commercial space. But a lack of regulation and insufficient risk models create fundamental challenges. "There are too many unknowns. We can't quantify risks precisely enough to support sustainable insurance solutions," Berger said.
An unnamed insurance industry executive was more blunt: "This is a very high-risk venture." He described the space sector as a "Wild West," lacking mature regulation, adequate capital reserves, or reliable models to assess various loss scenarios. Orbital data centers face multiple technical risks, including launch failures, cosmic radiation, hardware malfunctions, thermal management issues, and the growing threat of space debris collisions. Unlike terrestrial data centers, equipment damaged in orbit often requires another spacecraft launch for repair or replacement, at extremely high cost.
For the insurance industry, these challenges also present opportunities. If computing moves en masse to space, it will create a new underwriting universe worth trillions of dollars. But to take on this new business, the industry will likely need to build a complete set of underwriting rules, risk models, and pricing systems from scratch.
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