SpaceX and other tech giants are planning to move computing infrastructure into orbit, but the insurance industry is struggling to figure out how to protect assets that have never existed at scale before. The company filed with the Federal Communications Commission in January for a constellation of up to 1 million satellites that could form an orbital artificial intelligence data center, with CEO Elon Musk arguing that solar-powered computing in space could become cheaper than Earth-based data centers within two to three years as launch costs fall.

Why Are Tech Companies Moving Data Centers to Space?

The economics are compelling. Musk has positioned orbital computing as a solution to the rising costs of powering terrestrial data centers, which consume enormous amounts of electricity. If launch costs continue to decline and space-based solar power becomes viable, companies could theoretically save billions on energy expenses. Jeff Bezos is also betting on this future through his space tech company Blue Origin, which filed plans in March for 51,600 data-center satellites in low Earth orbit, though Bezos told CNBC in May that a two- to three-year timeline for profitability is "a little ambitious".

Google is exploring Project Suncatcher, an interconnected network of solar-powered satellites using its artificial intelligence chips, while startup Starcloud has already flown an Nvidia H100 graphics processing unit (GPU) in orbit. These moves suggest that orbital computing is transitioning from theoretical concept to near-term business reality.

What Makes Insuring Space Data Centers So Difficult?

If these ambitions add up to hundreds of billions of dollars of hardware in space, insurance becomes part of the equation. Currently, about 30 insurers worldwide specialize in space coverage, with annual premiums totaling roughly $500 million to $750 million, a fraction of what would likely be needed to insure hundreds of billions of dollars of orbital computing infrastructure.

The technical risks are substantial and largely unprecedented. Orbital data centers would face launch failures, radiation exposure, hardware breakdowns, heat-management challenges, and the growing risk of collisions with space debris. Unlike terrestrial data centers, repairs or replacement could require another launch, multiplying costs and downtime.

"There are too many unknowns to quantify the risk with enough confidence to support a sustainable insurance proposition," said Andreas Berger, group CEO of global reinsurer SwissRe.

Andreas Berger, Group CEO at SwissRe

One unnamed insurance executive was even blunter about the challenges, describing the space as "the Wild West" due to lack of regulation, insufficient capital, and no reliable ability to model the risk.

How Are Insurers Approaching This New Market?

Despite the uncertainties, insurers and clients are already showing interest. Patton Kline, Marsh U.S. aviation and space practice leader, argued that orbital compute is an extension of a space insurance market that has covered launches and satellites for decades, and it offers insurers risk largely uncorrelated with hurricanes, earthquakes, and other terrestrial catastrophes.

• Market Opportunity: If computing moves into orbit, a new multibillion-dollar class of assets could move with it, creating substantial revenue opportunities for insurers willing to take on the risk.
• Regulatory Uncertainty: Before insurers can cover orbital data centers, they may need to work with regulators to establish new frameworks for space-based infrastructure, a process that could take years.
• Risk Modeling Challenges: Insurers must develop entirely new models to price risks including radiation damage, space debris collisions, launch failures, and the unprecedented costs of orbital repairs.

"If you're an insurer and you're just writing terrestrial assets, and you're not looking at space as kind of the next frontier for insurance underwriting, you're going to miss out on a big growth story," said Patton Kline, Marsh U.S. aviation and space practice leader.

Patton Kline, U.S. Aviation and Space Practice Leader at Marsh

The insurance industry faces a classic problem: the opportunity is enormous, but the unknowns are equally vast. Before insurers can cover the next data-center boom in orbit, they may have to invent much of the rulebook themselves, working alongside regulators, space companies, and technology firms to establish standards for pricing, coverage limits, and risk assessment.

For SpaceX and other companies pursuing orbital computing, the lack of a mature insurance market could slow deployment. For insurers, the challenge is deciding whether to wait for more certainty or take calculated risks on a market that could reshape the entire industry within the next decade.