COMMERCIAL SPACE 

LAUNCH ACT

Preliminary Information on 

Issues to Consider for 

Reauthorization 

Statement of Alicia Puente Cackley, Director 

Financial Markets and Community Investment 

Testimony 

Before the Subcommittee on Space, and 

Aeronautics, Committee on Science, 

Space, and Technology, House of 

Representatives

For Release on Delivery 

Expected at 10:00 a.m. EDT

Wednesday, June 6, 2012

GAO-12-767T

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-767T, a testimony

before the Subcommittee on Space and 

Aeronautics, Committee on Science, Space 

and Technology, House of Representatives

June 6, 2012

COMMERCIAL SPACE LAUNCH ACT

Preliminary Information on Issues to Consider for 

Reauthorization 

Why GAO Did This Study

A catastrophic commercial launch 

accident could result in injuries or 

property damage to the uninvolved 

public, or “third parties.” In anticipation 

of such an event, a launch company 

must purchase a fixed amount of 

insurance for each launch, per 

calculation by FAA; the federal 

government is potentially liable for 

claims above that amount up to an 

additional $1.5 billion, adjusted for 

inflation, subject to congressional 

appropriations. As of 2012, the 

inflation-adjusted amount is about 

$2.7 billion. CSLA provides for this 

payment, called indemnification. The 

indemnification provision, unless 

reauthorized, expires this year.

This testimony provides preliminary 

information on, among other things, 

(1) a comparison of the U.S. 

government’s indemnification policy to 

policies of other countries, (2) the 

federal government’s potential costs 

for indemnification, (3) the ability and 

willingness of the insurance market to 

provide additional coverage, and 

(4) the effects of ending 

indemnification on the competitiveness 

of U.S. launch companies. This 

testimony is based on ongoing work 

that includes a review of FAA data and 

documents and relevant literature and 

interviews with officials from FAA, 

National Aeronautics and Space 

Administration, insurers, brokers, 

launch companies, launch customers, 

risk modelers, and experts.

What GAO Recommends

GAO is making no recommendations in 

this statement but anticipates doing so 

in its final report.

What GAO Found

GAO’s work to date indicates that the United States provides less indemnification 

for third party losses than China, France, and Russia, according to studies. 

These countries put no limit on the amount of government indemnification 

coverage currently available through the Commercial Space Launch Act 

Amendments of 1988 (CSLA) which is about $2.7 billion per launch. These 

commitments to pay have never been tested because there has never been a 

third party claim that exceeded the launch company’s insurance and thus 

reached the level of government indemnification. 

The potential cost to the federal government of indemnification for third party 

losses is currently unclear. This is because it depends in part on the method 

used by the Federal Aviation Administration (FAA) to calculate the amount of 

insurance that launch companies must purchase, which may not be sound. FAA 

has used the same method since 1988 and has not updated crucial components, 

such as the cost of a casualty. Estimating probable losses from a rare 

catastrophic event is difficult, and insurance industry officials and risk modeling 

experts said that FAA’s method is outdated. FAA, however, has not had outside 

experts or risk modelers review its appropriateness. An inaccurate calculation 

that understates the amount of insurance a launch provider must obtain would 

increase the likelihood of costs to the federal government, whereas a calculation 

that overstates the amount of insurance would decrease the likelihood of federal 

costs. FAA officials said that their method was reasonable and conservative, but 

they agreed that a review could be beneficial and that involvement of outside 

experts might be helpful for improving their methodology. Overall, they said use 

of more sophisticated methodologies would have to be balanced with the 

additional costs to both FAA and the launch companies that would result from 

requiring and analyzing additional data.

The insurance market is generally willing and able to provide up to $500 million 

per launch as coverage for third party liability, according to industry 

representatives GAO contacted. Because the amount of insurance FAA requires 

launch providers to obtain averages about $99 million per launch, and coverage 

available through CSLA is about $2.7 billion above that, insurers could provide 

some of the coverage currently available through CSLA. However, the amount 

and price of insurance that could be provided could change quickly if a large loss 

were to occur, according to insurance industry representatives.

The actual effects on competition of eliminating CSLA indemnification are 

currently unknown. However, launch companies and customers GAO contacted 

believe that ending federal indemnification could lead to higher launch prices for 

U.S. launch companies, making them less competitive than foreign launch 

companies. Although the cost of third party liability insurance coverage for launch 

companies has been about 1 percent the dollar amount of coverage they 

purchased, how much this cost might increase in the absence of federal 

coverage is not clear. Launch customers said that price and vehicle reliability 

were key factors in their choice of a launch company. Launch companies 

reported that additional costs would be passed along to customers, but whether 

this increase alone would be sufficient reason for a launch customer to choose a 

foreign launch company over a U.S. company is also not clear.

View GAO-12-767T. For more information, 

contact Alicia Puente Cackley at (202) 512-

8678 or cackleya@gao.gov. 
 

Page 1 GAO-12-767T 

Chairman Palazzo, Ranking Member Costello, and Members of the 

Subcommittee:

Thank you for the opportunity to testify today on commercial space launch 

indemnification as you consider the upcoming reauthorization of the 

federal coverage provided through the Commercial Space Launch Act 

Amendments of 1988 (CSLA).1 This legislation made the federal 

government responsible, subject to an appropriation provided by 

Congress, for a portion of third party liability claims that arise from a 

catastrophic launch-related incident that results in injury or damage to 

uninvolved people or property.2

 

1

Pub. L. No. 100-657.

The goal was to provide a competitive 

environment for the U.S. commercial space launch industry by providing, 

among other things, government indemnity while still minimizing the cost 

to taxpayers. As figure 1 shows, the number of U.S. commercial 

launches, which are licensed by the Federal Aviation Administration 

(FAA), has generally declined since its peak of 17 in 1998.

2

51 USC 50915.

 
 

Page 2 GAO-12-767T 

Figure 1: Annual Number of Commercial U.S. Space Launches, 1997-2011

Although the number of U.S. commercial space launches has fallen in 

recent years, it is reasonable to expect an increase in the years ahead. 

The National Aeronautics and Space Administration (NASA) plans to 

begin procuring commercial cargo transportation services to the 

International Space Station (ISS) in 2012 and intends to procure 

commercial manned launches to carry its astronauts to the ISS beginning 

in 2017.3

 

3

All commercial missions for NASA thus far have been demonstration missions 

conducted under Space Act agreements, which involve NASA providing 

significant funds to private industry partners to stimulate the development of 

large-scale commercial space transportation capabilities. NASA has procured 

transportation services to the ISS to begin later in 2012 through traditional 

contractual arrangements. For more information on Space Act agreements, 

please see GAO, Key Controls NASA Employs to Guide Use and Management 

of Funded Space Act Agreements Are Generally Sufficient, but Some Could Be 

Strengthened and Clarified, 

A number of companies are developing new launch vehicles 

that could provide these orbital services. Other companies are developing 

suborbital vehicles that could carry passengers for space tourism flights.

GAO-12-230R (Washington, D.C.: Nov. 17, 2011).
 

Page 3 GAO-12-767T 

As you consider reauthorizing CSLA, our testimony today provides 

preliminary information on the following issues: (1) how the current U.S. 

commercial space launch indemnification policy compares to policies in 

other countries; (2) the federal government’s potential costs under CSLA; 

(3) the extent to which the insurance market is able and willing to provide 

third party liability insurance at levels currently provided by CSLA; (4) the 

implications of commercial manned launches for the current federal 

indemnification policy, including the gaps, if any, that exist in that policy 

and the potential financial risks those gaps pose; and (5) what is known 

about the direct and indirect effects that ending indemnification would 

have on the competitiveness of U.S. commercial launch companies.

This statement is based on ongoing work we are conducting at the 

request of this committee and the Senate Committee on Commerce, 

Science, and Transportation; we expect to issue a final report later this 

year with recommendations, as appropriate. We reviewed launch data 

from FAA and performed a literature search. We also reviewed 

documents from and conducted interviews with insurance brokers and 

underwriters who provide commercial launch companies with coverage 

for third party liability, experts in commercial space launch liability issues 

and risk management, representatives from launch companies and 

customers, and officials from FAA and NASA. Additional information on 

our methodology is provided in appendix I.

We conducted this performance audit from November 2011 to June 2012 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

The 1988 amendments to CSLA established the current U.S. policy to 

provide federal payment, subject to appropriation—known as 

indemnification—for a portion of claims by third parties for injury, damage, 

Background 

U.S. Indemnification 

Policy
 

Page 4 GAO-12-767T 

or loss that result from a commercial launch-related incident.4 All FAAlicensed commercial launches and landings by U.S. companies, whether 

unmanned or manned and from the United States or overseas, are 

covered by federal indemnification for third party damages that result from 

the launch or landing.5 Parties involved in launches—for example, 

passengers and crew—are not eligible for indemnification coverage.6

U.S. indemnification policy has a three-tier approach for sharing liability 

between the government and the private sector to cover third party 

claims:

• The first tier of coverage is the responsibility of the launch company 

and is handled under an insurance policy purchased by the launch 

company. As part of FAA’s process for issuing a license for a 

commercial launch or landing, the agency determines the amount of 

third party liability insurance a launch company is required to 

purchase so the launch company can compensate third parties for 

any claims for damages that occur as a result of activities carried out 

under the license.7 FAA calculates the insurance amount to reflect the 

maximum probable loss that is likely to occur because of an accident 

that results in third party damages, including deaths and injuries on 

the ground and damage to property from spacecraft debris.8 9

 

4

Pub. L. No. 100-657.

FAA 

uses a statistical approach to estimate expected losses based on 

estimated probabilities that a catastrophic incident could occur and 

the estimated costs of a catastrophic incident given the details of the 

5

51 USC 50914(a)(1)(A).

6

A crew includes any employee who performs activities directly relating to the launch, 

reentry, or other operation relating to the vehicle that carries human beings. 51 USC 

50902(2). A passenger—also called a spaceflight participant—is an individual who is not 

crew, carried aboard a launch vehicle or reentry vehicle. 51 USC 50902(17).

7

51 USC 50914.

8

51 USC 50914(c).

9

FAA makes this determination for each space launch by reviewing the specific 

circumstances of the launch, including the planned launch vehicle, launch site, payload, 

flight path, and the potential casualties and fatalities that could result from varying types of 

launch failures at different points along that path. FAA estimates the total cost of 

estimated casualties from a launch failure and uses this information as the basis for 

determining property damage. 
 

Page 5 GAO-12-767T 

specific launch. This first tier of required insurance coverage is 

capped at a maximum of $500 million for third party damages.10

• The second tier of coverage is provided by the U.S. government, and 

it covers any third party claims in excess of the specific first tier 

amount up to a limit of $1.5 billion adjusted for post-1988 inflation; in 

2012, the inflation-adjusted amount was approximately $2.7 billion.11

For the federal government to be liable for these claims, Congress 

would need to appropriate funds. This second tier of coverage will 

expire in December 2012 unless Congress reauthorizes it.12 (The 

other two tiers have no expiration date.)

• The third tier of coverage is for third party claims in excess of the 

second tier—that is, the federal coverage of $1.5 billion above the first 

tier, adjusted for inflation. Like the first tier, this third tier is the 

responsibility of the launch company, which may seek insurance 

above the required first tier amount for this coverage. Unlike the first 

tier, no insurance is required under federal law.

Another component of U.S. indemnification policy for commercial space 

launches is cross waivers. They provide that each party involved in a 

launch (such as the launch company, the spacecraft manufacturer, and 

the customer) agrees not to bring claims against the other parties and 

assumes financial responsibility for damage to its own property or loss or 

injury sustained by its own employees.13

According to FAA, no FAA-licensed commercial space launch since 1989 

has resulted in casualties or substantial property damage to third parties. 

In the event of a third party claim that exceeded the launch provider’s 

first-tier coverage, FAA would be involved in any negotiations, according 

to FAA officials, and the Secretary of Transportation must approve any 

settlement.

Cross waivers also do not have 

an expiration date.

14

 

1051 USC 50914(a)(3)(A)(i).

1151 USC 50915(a)(1). 

1251 USC 50915(f). 

1351 USC 50914(a)(4).

1451 USC 50915(b)(3).
 

Page 6 GAO-12-767T 

From 2002 through 2011, U.S. companies conducted approximately 17 

percent of commercial space launches worldwide, while Russia 

conducted 43 percent and France’s launch company conducted 24 

percent. Figure 2 shows the trend in number of commercial space 

launches over the last 10 years.

Figure 2: Number of Commercial Space Launches Worldwide, 2002-2011

Over the past several years Russian and French launches have 

generated the most revenues, followed by U.S. launches. In 8 of the last 

10 years, U.S. commercial launch companies generated less revenue 

than launches in either Russia or France. U.S. companies generated no 

commercial launch revenue in 2011 because they conducted no 

launches. (See fig. 3.)

Global Commercial Space 

Launch Industry
 

Page 7 GAO-12-767T 

Figure 3: Commercial Space Launch Revenues Worldwide, 2002-2011

Note: India is not included in this figure due to its small amount of revenues.
 

Page 8 GAO-12-767T 

Our work to date indicates that the United States provides less total third 

party liability coverage than China, France, or Russia—the primary 

countries that have conducted commercial space launches in the last 5 

years—according to published reports.15 These countries each have an 

indemnification regime in which the government states that it will assume 

a greater share of the risk compared to that of the United States because 

each country has a two-tiered system with no limit on the amount of 

government indemnification. By comparison, the United States caps 

government indemnification at $1.5 billion adjusted for inflation beyond 

the first-tier insurance amount.16

China, France, and Russia have a first tier of insurance coverage that a 

commercial launch company must obtain, similar to the United States. 

The second tier of government indemnification varies for these countries:

However, U.S. government coverage, in 

some cases, begins at a lower level than that of the other countries 

because U.S. coverage begins above the maximum probable loss, which 

averaged about $99 million for active FAA launch and reentry licenses as 

of January 2012 and ranged from about $23 million to $267 million. The 

level at which government coverage begins for the other four countries 

ranged from $79 million to $300 million.

• The Chinese government provides indemnification for third party 

claims over $100 million.

• The French government provides indemnification for third party claims 

over 60 million euros (about $75 million as of May 2012).

• The Russian government provides indemnification for third party 

claims over $80 million for the smaller Start launch vehicles and $300 

million for the larger Soyuz and Proton vehicles.17

For all these countries, their commitments to pay have never been tested. 

Globally, there has never been a third party claim for damages from a 

commercial space launch failure that reached second-tier coverage.

 

15In addition, India conducted one commercial space launch during this period, but we 

found conflicting information on the Indian government’s indemnification coverage, and 

therefore we are not including it in this discussion.

1651 USC 50915(a)(1)(B).

17The source for all the government amounts is Aerospace Corporation, Study of the 

Liability Risk-Sharing Regime in the United States for Commercial Space Transportation

(El Segundo, Calif.: August 2006), or FAA, Liability Risk-Sharing Regime for U.S. 

Commercial Space Transportation: Study and Analysis (Washington, D.C.: April 2002).

The United States 

Provides Less 

Liability Coverage 

Than Foreign 

Competitors Due to a 

Cap on Government 

Indemnification 
 

Page 9 GAO-12-767T 

The federal government’s potential costs under CSLA depend on (1) the 

occurrence of a catastrophic launch failure with third party claims that 

exceed the first tier of coverage and (2) Congress appropriating funds to 

cover the government’s liability under the second tier of coverage. FAA 

officials stated that no FAA-licensed commercial space launches have 

resulted in casualties or substantial property damage to third parties. As a 

result, FAA believes that it is highly unlikely that there will be any costs to 

the federal government under CSLA. In the event that a catastrophic 

failure did occur, FAA’s maximum probable loss calculation is intended to 

estimate the maximum losses likely to occur from a commercial space 

launch and determine the amount of third party losses against which 

launch companies must protect. In calculating maximum probable loss, 

FAA aims to include estimates of losses from events having greater than 

a 1 in 10 million chance of occurring, meaning that losses are very 

unlikely to exceed launch companies’ private insurance and become 

potential costs for the government under CSLA.

Under CSLA, if a rare catastrophic event were to occur whose losses 

exceeded private insurance coverage, the government would be 

responsible for paying claims that exceeded FAA’s maximum probable 

loss only if Congress provided appropriations for this purpose. Under 

CSLA, the federal government does not incur a legal liability unless an 

appropriation is made for this purpose.18

 

18CSLA requires the Secretary of Transportation to provide for the payment of specific 

types of successful third party claims to the extent provided in advance in an appropriation 

law or to the extent additional legislative authority is enacted providing for paying for 

claims in a compensation plan submitted to Congress by the President. 51 U.S.C. § 50915 

(a)(1). 

Accordingly, an obligation would 

not be recorded in the federal budget unless and until such an 

appropriation is made. While an obligation is not incurred or recorded for 

Potential Cost of 

Indemnification by 

the Federal 

Government Depends 

on a Variety of 

Factors 

Catastrophic Events and 

Congressional 

Appropriations 
 

Page 10 GAO-12-767T 

potential CSLA losses until an appropriation is provided, some insurance 

companies told us that they expect the government to pay losses that 

become eligible for coverage under CSLA.

While it is very difficult to assess catastrophic failures that have low 

probabilities but potentially high losses, FAA’s use of an appropriate 

process for determining the maximum probable loss is important because 

the maximum probable loss sets the point at which losses become 

potential costs to the government under CSLA. Our preliminary work 

identified several issues that raise questions about the soundness of 

FAA’s maximum probable loss methodology:

• FAA uses a figure of $3 million when estimating the cost of a single 

potential casualty—that includes either injury or death—which FAA 

officials said has not been updated since they began using it in 1988. 

Two insurers, as well as representatives of two companies that 

specialize in estimating damages from catastrophic events (modeling 

companies), said that this figure is likely understated. Because this 

number has not been adjusted for inflation or updated in other ways, it 

may not adequately represent the current cost of injury or death 

caused by commercial space launch failures. Having a reasonable 

casualty estimate can affect FAA’s maximum probable loss 

calculation and could affect the potential cost to the government from 

third party claims.

• FAA’s methodology for determining potential property damage from a 

commercial space launch starts with the total cost of casualties and 

adds a flat 50 percent to that cost as the estimate of property damage, 

rather than specifically analyzing the number and value of properties 

that could be affected in the event of a launch failure. One insurer and 

two risk modelers said that FAA’s approach is unusual and generally 

not used to estimate potential losses from catastrophic events. For 

example, officials from both modeling companies noted that the more 

common approach is to model the property losses first and derive the 

casualty estimates from the estimated property losses. For example, if 

a property loss scenario involves the collapse of a building, that 

scenario would have a different casualty expectation than a scenario 

that did not involve such a collapse. One modeler stated that FAA’s 

method might significantly understate the number of potential 

casualties, noting that an event that has a less than 1 in 10 million 

chance of occurring is likely to involve significantly more casualties 

than predicted under FAA’s approach. Moreover, a 2007 FAA review 

Maximum Probable Loss 

Soundness 
 

Page 11 GAO-12-767T 

conducted with outside consultants said that this approach is not 

recommended because of observed instances where casualties were 

low yet forecasted property losses were very large.19

• More broadly, FAA’s method does not incorporate what is known in 

the insurance industry as “catastrophe modeling.” One modeler told 

us that catastrophe modeling has matured over the last 25 years—as 

a result of better data, more scientific research, and advances in 

computing—and has become standard practice in the insurance and 

reinsurance industries.20 Catastrophe models consist of two 

components: a computer program that mathematically simulates the 

type of event being insured against and a highly detailed database of 

properties that could potentially be exposed to loss. Tens of 

thousands or more computer simulations are generated to create a 

distribution of potential losses and the simulated probability of 

different levels of loss.21

FAA officials told us that they have considered the possibility of using a 

catastrophe model. However, they expressed concern about whether the 

more sophisticated approach would be more accurate, given the great 

uncertainty about the assumptions, such as the probability and size of 

potential damages, that must be made with any model. Also, industry 

experts told us that a significant cost factor in catastrophe modeling is 

creating and maintaining a detailed database of exposed properties. One 

expert told us that in order for FAA to do such modeling, it would need to 

purchase a property exposure database, which could cost hundreds of 

thousands of dollars. Experts also disagreed on how feasible it would be 

to mathematically model the potential damages associated with space 

launches. One expert thought such modeling would not be credible 

because the necessary knowledge of the factors that can influence a 

space launch is not at the same level as the more developed research for 

modeling hurricanes, for example. Another expert thought that it would be 

In contrast, FAA’s method involves 

estimating a single loss scenario.

 

19For more information on FAA’s methodology, see J.D. Collins, C.P. Brinkman, and C.L. 

Carbon, ACTA Inc., and FAA, Determination of Maximum Probable Loss (2007).

20Reinsurance is essentially insurance for insurers—that is, companies buy coverage for 

all or a part of a policy’s liability from other insurers in order to offset exposure. 

21The probability distribution of losses is typically presented in what is known as an 

exceedance probability curve, which shows the probability of losses exceeding various 

levels.
 

Page 12 GAO-12-767T 

possible to develop credible space launch simulation models. Another 

expert stated that such models have not been developed to date because 

of the government-provided indemnity coverage; this expert believed that 

if such coverage were the responsibility of the private sector, the 

necessary models might be developed.

FAA officials also said that they believe the maximum probable loss 

methodology is reasonable and produces conservative results for several 

reasons. First, FAA officials described a 2002 study on aviation casualty 

costs to support its use of a $3 million casualty figure for its calculation. 

Use of a casualty estimate that is based on 2002 data, however, still 

raises questions about whether this figure is outdated, which could result 

in underestimating the cost of casualties. Second, to support basing the 

potential cost of property damage on the potential cost of casualties, FAA 

officials said that they have conducted internal analyses using alternative 

methodologies—including some that assessed property values in the 

vicinity of launches—and compared them to their current methodology. In 

each case, officials said that the current methodology produced higher, or 

more conservative, maximum probable losses. We were unable to review 

or verify these analyses, however, because FAA officials said that these 

analyses were done informally and were not documented.

FAA officials acknowledged that updating the $3 million casualty figure 

and conducting analyses of potential property damage (rather than using 

a casualty cost adjustment factor of 50 percent) might produce more 

precise estimates of maximum probable losses. However, they said that 

because the probabilities assigned to such losses are still rough 

estimates, whether taking these actions would increase the accuracy of 

their maximum probable loss calculations is uncertain. Overall, they said, 

use of more sophisticated methodologies would have to be balanced with 

the additional costs to both FAA and the launch companies that would 

result from requiring and analyzing additional data. For example, a new 

methodology might require either FAA or the launch company to gather 

current property information, and might necessitate that FAA construct a 

statistical model for analyzing potential losses.

The same officials noted that they periodically evaluate their current 

maximum probable loss methodology, but acknowledged that they have 

not used outside experts or risk modelers for this purpose. They agreed 

that such a review could be beneficial, and that involvement of outside 

experts might be helpful for improving their maximum probable loss 

methodology. FAA’s 2007 review of potential alternatives identified a 

number of criteria for a sound maximum probable loss methodology that 
 

Page 13 GAO-12-767T 

could be useful in such a review. These included, among other things, 

that the process use a valid risk analysis, be logical and lead to a rational 

conclusion, and avoid being overly conservative or under conservative. A 

sound maximum probable loss calculation can be beneficial to both the 

government and launch companies because it can help ensure that the 

government is not exposed to greater costs than intended (such as might 

occur through an understated maximum probable loss) and help ensure 

that launch companies are not required to purchase more insurance 

coverage than necessary (such as might occur through an overstated 

maximum probable loss).

Our preliminary work found that some insurers and brokers suggested 

that the maximum amount of private sector third party liability coverage 

the industry is currently willing to provide is generally around $500 million 

per launch. This amount, or capacity, is determined by the amount of their 

own capital that individual insurers are willing to risk by selling this type of 

coverage. According to some insurers and brokers with whom we spoke, 

commercial space launch third party liability coverage is a specialized 

market involving a relatively small number of insurers that each assume a 

portion of the risk for each launch. One broker said that no launch 

company thus far has pursued private sector insurance protection above 

$500 million. Two insurers said that there might be slightly more coverage 

available beyond $500 million, and one said that up to $1 billion per 

launch in liability coverage might be possible in the private insurance 

market.

The cost to launch companies for purchasing third party liability 

insurance, according to some brokers and one insurer, is approximately 1 

percent or less of the total coverage amount. According to FAA data on 

commercial launches, the average maximum probable loss is about $99 

Current Private 

Market Capacity for 

Coverage Is Generally 

$500 Million per 

Launch, but a Large 

Loss Could Decrease 

Capacity 

Private Capacity
 

Page 14 GAO-12-767T 

million. As a result, in the absence of CSLA indemnification, insurers 

could still provide some of the coverage currently available through the 

government under CSLA. For example, if the maximum probable loss for 

a launch is $100 million and the insurance industry is willing to offer up to 

$500 million in coverage, the private market could potentially provide 

$400 million in additional coverage.

According to some insurers, brokers, and insurance experts with whom 

we spoke, there are a number of reasons why private sector insurers are 

generally unwilling to offer more third party liability coverage than $500 

million per launch.

• First, these brokers and insurers said that worldwide capacity for third 

party liability coverage is generally limited to $500 million per launch, 

which some considered a significant amount of coverage and a 

challenging amount to put together—particularly given that the 

number of insurers in the space launch market is relatively small.

• Second, according to these same officials, insurers are unwilling to 

expose their capital above certain amounts for coverage that at least 

currently brings in small amounts of premium relative to the potential 

payouts for losses. For example, they said that losses from a 

catastrophic launch accident could exceed many years of third party 

liability policy premiums and jeopardize insurers’ solvency.

• Third, according to some insurers and brokers with whom we spoke, 

to have sufficient capital to pay for losses above $500 million per 

launch would require insurers to charge policy premiums that would 

likely be unaffordable for space launch companies.

Our preliminary work also indicates that the current amount of private 

market capacity could change due to loss events and changing market 

conditions, according to some insurance industry participants. Some 

insurers and brokers said that a launch failure could affect the level and 

cost of coverage offered, and that a launch failure with significant losses 

could quickly raise insurance prices and reduce capacity, potentially 

below levels required by FAA’s maximum probable loss calculation. 

However, one risk expert suggested that a space launch failure would 

likely cause liability insurance rates to rise and that this might encourage 

insurers and capital to enter the space launch market and cause liability 

insurance capacity to increase. According to FAA, insurers have paid no 

claims for U.S. commercial launches to date, but they have paid some 

relatively small third party claims for U.S. military and NASA launch 

failures. For example, according to an insurance broker, a U.S. Air Force 

launch failure in 2006 resulted in property damage of approximately $30 

Changes to Market 

Capacity
 

Page 15 GAO-12-767T 

million. According to NASA, the Space Shuttle Columbia accident in 2003 

resulted in property damage of approximately $1.2 million. Two brokers 

said that given the low number of launches and low probability of 

catastrophic events, total worldwide premiums for space liability coverage 

are approximately $25 million annually, amounts insurers believe are 

adequate to cover expected losses. However, if a large loss occurs, 

according to two insurers, they would likely increase their estimates of the 

potential losses associated with all launches.

Under CSLA, launch companies must purchase coverage to meet FAA’s 

maximum probable loss amount or purchase the maximum amount of 

coverage available in the world market at reasonable cost, as determined 

by FAA.22 The potential cost to the government could increase if losses 

caused insurance prices to rise and insurance amounts available at 

reasonable cost to decrease. Some insurers and brokers also said that 

the amount of insurance the private market is willing to sell for third party 

liability coverage for space launches can also be affected by changes in 

other insurance markets. For example, large losses in aviation insurance 

or in reinsurance markets could decrease the amount of capital insurers 

would be willing to commit to launch events because losses in the other 

markets would decrease the total pools of capital available.

Because launch failures and changing market conditions could change 

the amounts of coverage available in the private market, you have 

expressed interest in other possible ways of managing catastrophic risk. 

While we have not conducted specific work to analyze the feasibility of 

alternative approaches for providing coverage currently available through 

CSLA, FAA and others have looked at possible alternatives to CSLA 

indemnification and we have examined different methods for addressing 

the risk of catastrophic losses associated with natural disasters and acts 

of terrorism.23

 

2251 USC 50914(a)(3).

These events, like space launch failures, have a low 

23See FAA, Liability and Risk-Sharing Regime for U.S. Commercial Space Transportation: 

Study and Analysis, and Aerospace Corporation, Study of the Liability Risk-Sharing 

Regime in the United States for Commercial Space Transportation. See also GAO, 

Catastrophe Insurance Risks: The Role of Risk-Linked Securities and Factors Affecting 

Their Use, GAO-02-941 (Washington, D.C.: Sept. 24, 2002); Catastrophe Insurance 

Risks: The Role of Risk-Linked Securities, GAO-03-195T (Washington, D.C.: Oct. 8, 

2002); and GAO, Natural Disasters: Public Policy Options for Changing the Federal Role 

in Natural Catastrophe Insurance, GAO-08-7 (Washington, D.C.: Nov. 26, 2007).

Alternatives for 

Addressing Space Launch 

Risk 
 

Page 16 GAO-12-767T 

probability of occurrence but potentially high losses. Some methods 

involve the private sector, including going beyond the traditional 

insurance industry, in providing coverage, and include the use of 

catastrophe bonds or tax incentives to insurers to develop catastrophe 

surplus funds. Other methods aid those at risk in setting aside funds to 

cover their own and possibly others’ losses, such as through selfinsurance or risk pools.24 Still other methods, such as those used for flood 

and terrorism insurance, involve the government in either providing 

subsidized coverage or acting as a backstop to private insurers.25

Use of any such alternatives could be complex and would require a 

systematic consideration of their feasibility and appropriateness for third 

party liability insurance for space launches. For example, according to a 

broker and a risk expert, a lack of loss experience complicates possible 

ways of addressing commercial space launch third party liability risk, and 

according to another risk expert, any alternative approaches for managing 

this risk would need to consider key factors, including the

• number of commercial space launch companies and insurers and 

annual launches among which to spread risk and other associated 

costs; 

• lack of launch and loss experience and its impact on predicting and 

measuring risk, particularly for catastrophic losses; and

• potential cost to private insurers, launch companies and their 

customers, and the federal government.

As such, alternatives could potentially require a significant amount of time 

to implement.

 

24See GAO, Catastrophe Insurance Risks: Status of Efforts to Securitize Natural 

Catastrophe and Terrorism Risk, GAO-03-1033 (Washington, D.C.: Sept. 24, 2003). Selfinsurance occurs when an entity assumes the risk for its losses and can involve the 

formation of an insurance company solely for that purpose. Risk pooling occurs when two 

or more entities agree to set aside funds to help pay for the others’ losses.

25See GAO, Flood Insurance: FEMA’s Rate-Setting Process Warrants Attention, 

GAO-09-12 (Washington, D.C.: Oct. 31, 2008), and Terrorism Insurance: Status of Efforts 

by Policyholders to Obtain Coverage, GAO-08-1057 (Washington, D.C.: Sept. 15, 2008). 
 

Page 17 GAO-12-767T 

Our preliminary work indicates the planned increase in manned 

commercial launches raises a number of issues that have implications for 

the federal government’s indemnification policy for third party liability, 

according to insurance officials and experts with whom we spoke. NASA 

expects to begin procuring manned commercial launches to transport 

astronauts to the ISS in 2017. In addition, private companies are also 

developing space launch vehicles that could carry passengers for space 

tourism flights. 

First, the number of launches and landings covered by federal 

indemnification will increase with NASA’s planned manned launches if 

they are determined to be FAA-licensed commercial launches. NASA 

expects to procure from private launch companies 2 manned launches 

per year to the ISS from 2017 to 2020. NASA and FAA have not yet 

determined if those launches will be covered under NASA’s procurement 

policy or FAA’s licensing regulations.26

 

26NASA-contracted launches for NASA’s science missions are not currently covered by 

CSLA; rather, NASA requires its launch contractors to obtain insurance coverage for third 

party losses. The amount of the insurance required by NASA is the maximum amount 

available in the commercial marketplace at reasonable cost, but does not exceed $500 

million for each launch. The facts and circumstances for claims in excess of this amount 

would be forwarded by NASA to the Congress for its consideration 51 U.S.C. § 20113 (m) 

(2). NASA-contracted launches for the Commercial Resupply Services to the ISS will be 

licensed by the FAA under CSLA, and will be covered by CSLA indemnification. NASA 

has not yet determined if its commercially procured manned launches to the ISS will be 

FAA licensed. If they become FAA licensed, then third party claims for those launches 

would be covered by the CSLA indemnification policy.

In addition, the development of a 

space tourism industry may also increase the number of launches and 

landings covered by federal indemnification, but the timing of tourism 

Forecasted Increase 

in Manned Launches 

and Landings Could 

Increase the Potential 

Costs for the Federal 

Government, and 

Current Coverage Has 

a Gap

Issues and Implications 

Relating to Commercial 

Manned Launches
 

Page 18 GAO-12-767T 

launches and landings is uncertain. Among the potential space tourism 

companies, Virgin Galactic is the closest to conducting suborbital, 

manned launches, according to FAA. Virgin Galactic forecasts launches 

starting in 2014 and, according to the company, 500 individuals have 

made deposits for the $200,000 fare. However, Virgin Galactic has not 

yet applied to FAA for a launch license and its planned schedule for 

flights has experienced delays in the past.

According to insurance company officials with whom we spoke, the 

potential volume of manned launches for NASA and for space tourism 

could increase the overall amount of insurance coverage needed by 

launch companies, which could raise insurance costs, including those for 

third party liability.27

Second, because newly developed manned launch vehicles have less 

launch history they are viewed by the insurance industry as more risky 

than “legacy” launch vehicles. Insurance company officials told us that 

launch vehicles such as United Launch Alliance’s Atlas V, which launches 

satellites and may be used for future manned missions, is seen as less 

risky than new launch vehicles, such as SpaceX’s Falcon 9, which could 

also be used for manned missions. As of May 2012, Atlas V has had over 

two dozen launches with a 100 percent launch success rate; Falcon 9 has 

had 3 successful launches. According to insurance company officials with 

whom we spoke, they expect to charge higher insurance premiums for 

newly developed launch vehicles than legacy launch vehicles given their 

different risk profiles. Insurance company officials’ opinions varied as to 

when a launch vehicle is deemed reliable—from 5 to 10 successful 

launches. They also told us that whether vehicles are manned is 

secondary to the launch vehicle’s history and the launch’s trajectory—

over water or land—in determining risk and the price and amount of third 

party liability coverage.

By increasing the volume of launches, the probability 

of a catastrophe occurring is also increased and any accident that occurs 

could also increase future insurance costs, according to insurance 

company officials with whom we spoke. A catastrophic accident could 

also result in third party losses over the maximum probable loss, which 

would invoke federal indemnification.

 

27Launch providers obtain insurance in addition to that for third party liability, including 

coverage of assets, such as the launch vehicle.
 

Page 19 GAO-12-767T 

Third, having any people on board a space vehicle raises issues of 

informed consent and cross waivers, which could affect third party liability 

and the potential cost to the federal government. CSLA requires 

passengers and crew on spaceflights to be informed by the launch 

company of the risks involved and to sign a reciprocal waiver of claims 

(also called a cross waiver) with the federal government—which means 

that the party agrees not to seek claims against the federal government if 

an accident occurs.28 CSLA also requires cross waivers among all 

involved parties in a launch.29

• The estates of spaceflight passengers and crew, which are 

considered third parties to a launch, are not covered by the informed 

consent and cross waiver of claims, according to two insurance 

companies and one legal expert. Although an insurance company 

said that it would be difficult for estates to seek damages in case of an 

accident, the legal expert said that the informed consent requirement 

does not address future litigation issues. Officials from two Insurance 

companies and one expert told us that they expect spaceflight 

passengers to be high-income individuals, which could result in large 

insurance claims by estates of the passengers, as determination of 

the amount of claims is based on an individual’s expected earning 

capacity over his or her lifetime.

Two key issues dealing with cross waivers 

include the estates of spaceflight passengers and crew and limits on 

liability for involved parties.

• According to two insurance companies and two legal experts, 

requiring cross waivers among passengers, crew, the launch 

company, and other involved parties may not minimize potential third 

party claims as they would not place limitations on liability. An 

insurance company and a legal expert stated that, without a limitation 

on liability, insurance premiums for third party and other launch 

insurance coverage could increase as the same small number of 

insurance companies insures passengers, crew, launch vehicles, as 

well as third parties to a launch. According to FAA, putting a limitation 

on spaceflight passenger liability could foster the development of the 

commercial space launch industry through lower costs for insurance

and liability exposure. Liability exposure and the related litigation 

 

2851 USC 50905(b)(5).

2951 USC 50914(b)(1).
 

Page 20 GAO-12-767T 

impose costs on industries and the limitation on liability shifts the risk 

to spaceflight passengers, who have been informed of the launch 

risks. If limitations on liability were set by federal legislation, it could 

conflict with state law because at least five states currently have their 

own space liability and indemnity laws limiting liability.30 Launch and 

insurance companies believe that a limit or cap on passenger liability 

could decrease uncertainty and consequently decrease the price of 

insurance, according to a FAA task force report.31

As previously discussed, the potential cost to the government depends on 

the accuracy of the maximum probable loss calculation, which assesses a 

launch’s risk. If the calculation is understated, then the government’s 

exposure to liability is higher. Thus, whether the launch vehicle is newly 

developed or manned, the effect on the government’s potential cost for 

third party claims is still based on how accurately the maximum probable 

loss calculation assesses launch risks. FAA officials told us that they 

intend to use the same maximum probable loss assessment method for 

manned launches as they currently do with unmanned launches.

Officials from the insurance industry and space launch companies and an 

expert told us that a gap in federal indemnification is the lack of coverage 

of on-orbit activities—that is, activities not related to launch or reentry, 

such as docking with the ISS and relocating a satellite from one orbit to 

another orbit—but they did not agree on the need to close this gap. FAA 

licenses commercial launches and reentries, but does not license on-orbit 

activities. Federal indemnification only applies to FAA-licensed space 

activities. NASA’s commercial manned launches to the ISS will involve 

on-orbit activities, including docking with the ISS, will be subject to the 

cross waivers of liability required by agreements with participating 

countries. This cross waiver is not applicable when CSLA is applicable, 

such as during a licensed launch or reentry, and it does not address 

liability for damage to non-ISS parties such as other orbiting spacecraft. 

Claims between NASA and the launch company are not affected by the 

ISS cross waiver and are historically addressed as a contractual 

agreement. In addition, Virgin Galactic operations will only have 

suborbital launches and reentries and no on-orbit activities that require 

 

30Those states are Colorado, Florida, New Mexico, Texas, and Virginia. 

31FAA, FAA’s Response to NASA on the Insurance Task for Commercial Crew

(Washington, D.C.: Apr. 30, 2012).

Gap in Federal 

Indemnification
 

Page 21 GAO-12-767T 

regulation. Therefore, according to officials from two launch companies, 

they did not believe that on-orbit activities need to be regulated by FAA or 

that federal indemnification coverage should be provided. However, one 

insurer noted that other proposed manned launches—such as Bigelow’s 

planned on-orbit “hotel”—will not be NASA related and therefore will not 

covered by any regulatory regime. An expert noted that such a proposal 

for an on-orbit hotel remains an open question regarding regulation and 

liability exposure. In addition, the expert noted that federal oversight of 

on-orbit activities may be needed to provide consistency and coordination 

among agencies that have on-orbit jurisdiction. He pointed out that the 

Federal Communications Commission and the National Oceanic and 

Atmospheric Administration have jurisdiction over their satellites and 

NASA has jurisdiction over the ISS. Thus, according to the expert, there 

should be one federal agency that coordinates regulatory authority over 

on-orbit activities.

FAA may seek statutory authority over on-orbit activities, according to 

senior agency officials. They further explained that they are not seeking 

on-orbit authority for satellite or spectrum usage. An insurer told us that 

having FAA in charge from launch to landing would help ensure that there 

were no gaps in coverage. According to this insurer, this would help bring 

stability to the insurance market in the event of an accident as involved 

parties would be clear on which party is liable for which activities. 

However, having FAA license on-orbit activities would increase the 

potential costs to the federal government for third party claims. If FAA 

obtains authority to license on-orbit activities then the potential costs to 

the government may increase as its exposure to risk increases.

Our work to date suggests that while the actual effects on competition of 

eliminating CSLA indemnification are unknown, several launch 

companies and customers with whom we spoke said that in the absence 

of CSLA indemnification, increased risk and higher costs would directly 

affect launch companies and indirectly affect their customers and 

suppliers. The same participants said that two key factors—launch price 

and launch vehicle reliability—generally determine the competitiveness of 

launch companies. According to two launch customers, launch prices for 

similar missions can vary dramatically across countries. For example, two 

customers said that a similar launch might cost about $40 million to $60 

million with a Chinese launch company, about $80 million to $100 million 

with a French launch company, and approximately $120 million with a 

U.S. launch company. However, another U.S. launch company told us 

that it is developing a vehicle for a similar launch for which it intends to 

Ending 

Indemnification Could 

Potentially Decrease 

U.S. Competitiveness
 

Page 22 GAO-12-767T 

charge about $50 million. Other considerations also would be involved in 

selecting a launch company, according to launch customers with whom 

we spoke. For example, some said that export restrictions for U.S. 

customers could add to their costs or prevent them from using certain 

launch companies. One launch customer also said that it considers the 

costs of transporting the satellite to the launch site as well as other 

specific aspects of a given launch.

Launch company officials said that the lack of government indemnification 

would decrease their global competitiveness by increasing launch costs. 

Launch company officials said their costs would increase as a result of 

their likely purchase of greater levels of insurance to protect against the 

increased potential for third party losses, as the launch companies 

themselves would be responsible for all potential third party claims, not 

just those up to the maximum probable loss amount. As previously 

discussed, whether the private insurance market has the capacity to 

provide coverage at levels currently provided by the government, or at 

what price they might sell such coverage, is uncertain. Some launch 

company officials said that their costs may also increase if their suppliers 

decided to charge more for their products or services as a result being at 

greater risk from a lack of CSLA indemnification. That is, to compensate 

for their greater exposure to potential third party claims, some suppliers 

might determine that they need to charge more for their products to cover 

the increased risks they are now assuming. Some launch companies told 

us that they would likely pass additional costs on to their customers by 

increasing launch prices. Two launch customers told us that in turn, they 

would pass on additional costs to their customers. Several also told us 

that they might increase the amount of their own third party liability 

insurance, another cost they might pass on to their customers. Two said 

they might be more likely to choose a foreign provider if the price of U.S. 

launches rose.

According to launch companies and customers we spoke with, ending 

CSLA indemnification would also decrease the competitiveness of U.S. 

launch companies because launch customers would be exposed to more 

risk than if they used launch companies in countries with government 

indemnification. For example, officials from several launch companies 

and customers said that if some aspect of the launch payload is 

determined to have contributed to a launch failure, they could be exposed 

to claims for damages from third parties. Launch customers are currently 

protected from such claims through the CSLA indemnification program. 

Several launch customers with whom we spoke said that without CSLA 
 

Page 23 GAO-12-767T 

indemnification they might be more likely to use a launch company in a 

country where the government provides third party indemnification.

According to launch companies with whom we spoke, ending CSLA 

indemnification could also have other negative effects. For example, 

some said that the increased potential for significant financial loss for third 

party claims could cause launch companies, customers, or suppliers to 

reassess whether the benefits of staying in the launch business outweigh 

the risks. If some companies decided it was no longer worthwhile to be 

involved in the launch business, it could result in lost jobs and industrial 

capacity. Lastly, one industry participant pointed out that some suppliers, 

such as those that build propulsion systems, have to maintain significant 

amounts of manufacturing capacity whether they build one product or 

many. If there are fewer launches, the cost of maintaining that capacity 

will be spread among these fewer launches, resulting in a higher price for 

each launch. To the extent that the federal government is a customer that 

relies on private launch companies for its space launch needs, it too could 

face potentially higher launch costs.

The actual effects of eliminating CSLA indemnification are unknown. For 

example, we do not know how insurance premiums or other costs might 

change as well as the availability of coverage. In addition, we do not know 

whether or to what extent launch customers might choose foreign launch 

companies over U.S. companies. Furthermore, it is difficult to separate 

out the effects of withdrawing indemnification on the overall 

competitiveness of the U.S. commercial space launch industry. Many 

factors affect the industry’s competitiveness, including other U.S. 

government support, such as research and development funds, 

government launch contracts, and use of its launch facilities, in addition to 

the third party indemnification.

Although the number of commercial launches by U.S. companies has 

generally decreased over the past few years, commercial space is a 

dynamic industry with newly developing space vehicles and missions. 

With the termination of the shuttle program, NASA plans to procure cargo 

delivery to the ISS from private launch companies later in 2012 and 

intends to use private companies to carry astronauts to the ISS starting in 

2017. In addition, private launch companies have been developing launch 

vehicles that will eventually carry passengers as part of an emerging 

space tourism industry. Our work to date suggests that both of these 

developments may increase the number and type of flights eligible for 

third party liability indemnification under CSLA. As the industry changes 

Concluding 

Observations 
 

Page 24 GAO-12-767T 

and grows, continually assessing federal liability indemnification policy to 

ensure that it protects both launch companies and the federal government

will be important. As we complete our analysis, we will more fully address 

any additional federal actions needed in response to these developments.

We provided a draft of this statement to FAA and NASA. FAA provided no 

comments and NASA provided technical comments which we 

incorporated as appropriate.

Chairman Palazzo, Ranking Member Costello, and Members of the 

Subcommittee, this concludes my prepared statement. I would be 

pleased to respond to any questions that you may have at this time.

If you or your staff have any questions about this testimony, please 

contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao.gov. 

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this statement. GAO staff who 

made key contributions to this testimony are listed in appendix II.

Agency Comments

GAO Contacts and 

Staff 

Acknowledgments 
Appendix I: Scope and Methodology

Page 25 GAO-12-767T 

To determine how the current U.S. commercial space launch 

indemnification policy compares to policies in other countries we 

conducted a literature review and selected four countries for 

comparison—China, France, India, and Russia—because they are the 

only countries other than the United States that have conducted 

commercial space launches in the last 5 years. Our source for the 

amounts of government indemnification provided by these countries is a 

2006 Aerospace Corporation report and a 2002 Federal Aviation 

Administration (FAA) report.1

To determine the federal government’s potential costs under the 

Commercial Space Launch Act Amendments of 1988 (CSLA), we 

reviewed CSLA, our past work on the budget treatment of insurance 

programs, and FAA’s maximum probable loss calculation. We also 

interviewed FAA officials and experts in risk modeling. To determine the 

extent to which the insurance market is able and willing to provide third 

party liability insurance at levels currently provided by CSLA, we reviewed 

CSLA to determine the amount of coverage the act provides commercial 

launch companies; reviewed relevant industry reports; and interviewed 

officials from FAA, insurance companies, and brokerage companies. We 

also interviewed launch company officials to determine the additional 

coverage they might seek absent CSLA indemnification. To determine a 

range of paid claims, we reviewed data from the National Aeronautics and 

Space Administration (NASA) on third party claims that have been paid 

as the result of the Space Shuttle Columbia accident and from an 

insurance official on third party claims paid as a result of a U.S. Air Force 

launch accident. We found the data sufficiently reliable for our purposes.

To the extent possible, we verified 

information from the literature review through discussions with officials 

from FAA, insurance companies, launch companies, and experts. We did 

not find sufficiently reliable information about India to report on its 

government indemnification.

To determine issues and implications of commercial manned launches for 

the current federal indemnification policy, including the gaps, if any, that 

exist in that policy and the potential financial risks those gaps pose, we 

interviewed officials from FAA, NASA, insurance companies, brokerage 

 

1

The Aerospace Corporation, Study of the Liability Risk-Sharing Regime in the United 

States for Commercial Space Transportation (El Segundo, Calif.: August 2006), and FAA, 

Liability Risk-Sharing Regime for U.S. Commercial Space Transportation: Study and 

Analysis (Washington, D.C.: April 2002). 

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 26 GAO-12-767T 

companies, and launch companies, and experts. To determine what is 

known about the effects of ending indemnification on the competitiveness 

of U.S. commercial launch companies, we obtained information from FAA 

on launches, payloads, and revenues from 1997 through 2011. As the 

information was used for background, we did not assess the reliability of 

the data. We also conducted interviews with officials from launch 

companies, launch customers, and industry associations, and experts.

We selected launch companies, insurance companies, brokerage 

companies, and launch customers for interviews that had conducted or 

participated in commercial launches in the past 5 years. In addition, we 

selected launch companies that are competing to conduct commercial 

launches as part of NASA’s Commercial Crew Development program or 

plan to conduct launches for space tourism. We also selected launch 

customers to include U.S. companies and foreign companies and those 

that had used both U.S. and foreign launch companies. We selected 

experts to interview to provide a variety of expertise, including space 

liability, risk modeling, and space law issues. Table 1 lists the 

organizations and agencies whose officials we interviewed as well as the 

experts we interviewed.

Table 1: Organizations and Agencies Interviewed

Category Organization or agency

Brokerage company AON

Marsh USA

Willis Inspace

Insurance company Chartis Europe Limited a

Global Aerospace

Starr Aviation

XL Insurance

Launch company The Boeing Company

Orbital Sciences Corporation

Sierra Nevada Corporation Space Systems

Space Exploration Technologies Corp (SpaceX) 

Launch customer Digital Globe a

GeoEye

Risk modeling company AIR Worldwide

Risk Management Solutions

Industry association The American Academy of Actuaries

Aerospace Industries Association

Satellite Industry Association

b
Appendix I: Scope and Methodology

Page 27 GAO-12-767T 

Category Organization or agency

Federal agency FAA 

NASA 

Expert Henry R. Hertzfeld, Research Professor, Elliott 

School of International Affairs, Space Policy 

Institute and Adjunct Professor of Law, The 

George Washington University

Howard Kunreuther, James G. Dinan Professor of 

Decision Sciences & Public Policy, Co-Director 

Risk Management and Decision Processes 

Center, Wharton School, University of 

Pennsylvania

Rosanna Sattler, Partner, Posternak, Blankstein, 

and Lund LLP 

Source: GAO.

a

An additional insurance company and launch customer were interviewed but did not wish to be 

identified.

b

The Aerospace Industries Association convened a panel that included the launch companies 

Lockheed Martin, Virgin Galactic, and ATK.

We conducted this performance audit from November 2011 to June 2012 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: GAO Contacts and Staff 

Acknowledgments

Page 28 GAO-12-767T 

Alicia Puente Cackley, (202) 512-8678 or cackleya@gao.gov

In addition to the contacts named above, individuals making key 

contributions to this testimony include Dr. Gerald L. Dillingham (Director), 

Teresa Spisak and Patrick Ward (Assistant Directors), Maureen LunaLong, James Geibel, Carol Henn, David Hooper, Shelby Oakley, Susan 

Offutt, Amy Rosewarne, Steve Ruszczyk, Melvin Thomas, and Frank 

Todisco.

Appendix II: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts

Staff 

Acknowledgments 

(540235)
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