Sunday, January 6, 2008

Meteorite Strike Insurance: Absolute Necessity or Needless Luxury?

Will insurance companies provide a proviso on their personal risk insurance for a phenomenon that boarder on the “Act of God”?


By: Ringo Bones and Vanessa Uy


Throughout recorded history, only one person has been documented to having been hit by a meteorite from space. Fortunately, she survived. Because of this, opinions have always been divided in the insurance underwriters’ community whether the incident with Mrs. Hewlett Hodges should have been treated as a “freak occurrence.” She was extremely lucky though to have survived by being hit with a 10- pound fragment that pierced her roof and struck her left side. But first let us define which is which.

When the “rock” is still moving through the vacuum of space, it’s called a meteoroid. When the “rock” is glowing “pyrotechnically” as it enters the earth’s atmosphere, it’s called a meteor. When the said “rock” or “object” hits the earth surface, a house, or other unfortunate soul, it’s called a meteorite. These are the natural ones, while the increasingly commercial utilization of orbital space has created the problem of “space junk” that are the by - products of the launch of communication satellites which is also a possible source of meteorite strike hazard.

Concerns over the possibility of humans being injured or killed when hit by a meteorite strike usually becomes a topic of conversation during the annual meteor shower season that starts in August all through to mid –to- late November. These annual meteor showers occur in streams with established orbits. These meteor showers are named after the constellation from which they appear to radiate. Like the recent Perseid meteor shower that occurs in early August, which the one that occurred this year received heavy press coverage because of the ideal “viewing” conditions appear to radiate in the constellation Perseus. For those who missed it, don’t worry cause this coming late October the Orionid meteor shower will be radiating in the constellation of Orion. Though most of my buddies prefer the Leonid meteor shower because it’s occurrence from mid – to –late November in the constellation Leo are more likely to provide an ideal “viewing” conditions from our regular vantage point. Recent scientific studies have shown that that all recurrent meteor showers are mostly composed of debris left in the wake of comets, past or present.

Currently, Lloyds of London are the only known major insurance company that provides services on meteorite strike insurance policies. But the firm seriously advises anyone planning to purchase their meteorite strike “policies” to “think it over thoroughly” because these are somewhat expensive and meteorite strikes are statistically evaluated to a degree that their occurrence –in an average human lifetime- borders on the nonexistent. In the UK, meteor strikes (as written on their Webpage) are generally defined as an “Act of God.” According to the Website of Car Insurance in the UK (www.car-insurancefacts.co.uk) which defines “Act of God”; as an event not caused directly by an individual that causes damage to your vehicle. An example (albeit an unlikely one) would be a meteorite strike. More often than not, “Acts of God” are uninsurable.

While the “budget” side of the insurance industry doesn’t do business when it comes to insuring our person and property against meteorite strike insurance. There is also the rigmarole that they also fail to classify meteorites that are made by man i.e. spent rocket parts and other by-products of space travel and commerce (communication satellite launches) from those that are natural i.e. left over material from the creation of our solar system. Most of these insurance companies just classify these occurrences / incidents under the “Act of God” clause.

For all intents and purposes, its in the insurance companies of the world’s best interest to provide an insurance proviso on meteorite strikes, especially objects that are a product of the commercial utilization of space like the regular launching of communication satellites used for cellular phone and Internet data traffic. The profits generated by this activity has the mathematical equitability to make the meteorite insurance proviso economically viable to the average prospective client.

6 comments:

Heidi Gail said...

Back in 1998, I've taken very interesting notes on the matter given that Hollywood released two movies about extinction level events about impacts from outer space like Deep Impact and Armageddon within a few months from each other.
Dave Morrison of NASA 's Ames Research Center states that in considering options for planetary defense, we must balance the cost (including lost-opportunity costs) against the value of the risk that is mitigated. That is why NASA studies of the impact hazard - like the 1992 Spaceguard Report and the 1995 Shoemaker Committee Report - focused on the most immediate issue: discovering all the larger Near-Earth Objects (NEO 's) especially those with diameters greater than 1 kilometer and identifying any that pose a threat of impact. No plan of defense makes sense without this crucial first step i.e. you can't take action on threats that you can't see.
Several studies were done back in 1998, including an economic analysis in FORTUNE magazine, have estimated the level of expenditure that might be reasonable to insure the Earth against the most catastrophic impacts.

Guapita said...

I too did a research report during my Freshman year in College back in 1998 due to those same movies - "Deep Impact" and "Armageddon" - on how an insurance actuarial might compute for premiums and payouts. I did use that article on FORTUNE magazine as a basis for my research. Back then as it is currently known, an impact that could lead to 1 billion human casualties occurs roughly once for every million years - which is equivalent to 1,000 deaths per year. Various economic studies suggest that the value of saving a human life for purposes of hazard mitigation is between US$10,000 and US$1 million. This value can also be estimated as the lost lifetime earnings resulting from an accidental death. From these actuarial arguments, the maximum level of insurance is on the dollar level of lives saved annually - in this case is between US$10 million and US$1 billion per year.
How does this dollar range compare with what is being spent, or proposed to be spent, for defense against Near Earth Objects (NEO s) and Earth-crossing asteroids? The Spaceguard Report - back in 1997 - recommended a search program that would cost US$10 million per year. The Shoemaker Committee reduced this to US$6 million per year, on the assumption that there would be free access to the 1-meter telescopes of the US Air Force GEODSS network. For fiscal year1999, NASA was expected to invest US$3 million through its new NEO Program Office, and the Air Force is also devoting some of its resources to NEO searches. For perspective, to achieve the objective of finding all NEOs larger than 1 kilometer in the decade after 1998, the productivity of the search system must be increased by a factor of 10 over the 1997 discovery rate. Back then 90% of NEOs can not yet be detected with a comfortable degree of accuracy compare to our present 40%. I suggest that in the future you would do a blog evaluating on how the latest European Space Agency's Don Quixote Project - projected cost US$129 million to counter the threat of the asteroid 99942 Apophis / 2004 Apophis - will affect actuarial computations of meteorite strike insurance premiums and payouts.

JANE MO said...

The first and only person ever hit by a meteorite fragment was Mrs. Ann Hewlett Hodges and her story / ordeal was featured in LIFE magazine. I happened to find this old issue of LIFE stashed away in our attic. Her odds of being hit by a meteorite - as featured in many a math / statistical textbook was found to be 1 in 150 trillion.
If meteorite strike insurance ever became "mainstream", I think there would be a problem. Because - to me at least - insurance companies make so much money because they charge their clients high premium rates and then underplay or even deny claims altogether. This widespread practice of "Insurers Bad Faith" has perpetuated a perception in the general public that insurance companies - as a whole - are just daring us to fight back. Unless of course the government regulators find insurance companies riding on the "Basel Accord Hog" as their own "Golden Goose".

Rosemary said...

I think the legal precedent that started to classify meteorite strikes as an "Act of God" for insurance providers started after the aftermath of the Christmas Meteorite that fell on Barwell, England back in December 24, 1965. One of Barwell's citizens had the misfortune of having his car hit by one of the Christmas Meteorite's fragments. His UK-based car insurance provider refused to pay, citing meteorite strikes as an "Act of God". Even the local Church of Barwell refused to compensate the damage inflicted on the man's car despite his car insurance provider's insistence that meteorite strikes are an "Act of God". Ain't it weird?

Veracruz said...

When it comes to the legal precedent or legal firsts on whether to classify meteorite strikes on insured properties - especially cars - as being classified as an "Act of God", the Barwell Christmas meteorite of December 24, 1965 seems to be the the most often cited example. Even though the car owner never too his case to court / presided over by a competent judge. Has the Barwell Christmas meteorite incident even got the legal proceedings that it supposed to deserve? The UK car insurance providers - in my opinion - are still on shaky legal ground everytime they call a meteorite strike on insured cars as an "Act of God". What about man-made "space-junk" - i.e. former metallic components of spacecraft that fell back to Earth intact then hitting an insured property? You should do a blog which pertains on this meteorite strike insurance proviso. The US Space Command / NORAD is now busy "tracking" over 10,000 pieces of space-junk in Earth's orbit. Given that these pieces are moving on average at 17,000 miles per hour - about the same speed of the fragments thrown-off by an antipersonnel grenade or mine - surely qualifies as a threat to me.

Vanessa said...

When it comes to catastrophic meteorite strikes, the US Government is probably the only "corporate entity" in the world that has the means to be pro-active or before-the-fact when it comes to dealing with an impending meteorite strike insurance on the Earth's surface. Like identifying and diverting incoming Earthbound asteroids via billions of dollars worth of "defensive" infrastructure - i.e. Spaceguard Program and the US Air Force GEODSS network.
While insurance companies are after-the-fact or reactive when it comes to dealing with catastrophic meteorite strikes that resulted in loss of life or property damage of their policyholders.
The Barwell Christmas meteorite that fell on the town of Barwell, England back in December 24, 1965 did manage to inflict damage on someone's car -which fortunately - happens to be insured. It did prove to be a legal precedent on what is defined as an "Act of God" in insurance contract provisos - especially when it comes to UK Car Insurance laws. In all of recorded history, there were only two cars that were ever hit by a meteorite that originated from outer space - that was reported by the media or that we know of anyway.