THE WRITE STUFF

Aerojet Rocketdyne, Boeing, Jacobs,

Lockheed Martin, Northrop Grumman

AEROSPACE INSURANCE

Presenters:

• Lockheed Martin – Michael Harrington – Director of Risk Management

• Boeing – Jeff Breland – Director of Contractual Risk Management and Insurance

• Marsh JLT Specialty - Patton Kline, Managing Director, US Space Practice Leader

Human Space Flight Heritage

Saturn

Skylab

Apollo

Soyuz

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 20

Mercury

Apollo

Space StationGemini

Space Shuttle

Commercial Crew

ICIO CAPPSPGOC

Ares SLS

Boeing Space Exploration

Space Launch SystemAmerica’s Rocket for Deep Space Exploration

Copyright © 2018 Boeing. All rights reserved.

September 2019

NASA’s Exploration Campaign

Space Launch SystemThe Only Rocket That Can Deliver Orion to the Moon and Beyond

SLS Program Overview

Deep Space Exploration Rocket

• 95 metric ton (mt) evolvable to 130 mt

• Serves as primary transportation for Orion and exploration missions

• Offers volume for science missions and other payloads of national importance

Customer

• NASA Marshall Space Flight Center, Huntsville, Alabama

Near-Term Capability

• First flight in late 2020

SLS is the Backbone of NASA’s Human Deep Space Exploration Plans

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SLS Block 1B

Launch Abort System

Interstage

Core Stage

RS-25

Engines (4)

Service Module

Payload Attach Fitting (PAF)

Solid Rocket

Boosters (2)

Exploration Upper Stage

Encapsulated Service Module Panels

Crew Module

Orion Multi-Purpose

Crew Vehicle

Spacecraft Adapter

HAB/Cargo

RL10 Engines (4)

Universal Stage Adapter

SLS Block 1B

Northrop

Grumman

Aerojet

Rocketdyne

Lockheed Martin

Boeing

Boeing

Dynetics

Exploration Ground Systems

Jacobs Engineering Group

Boeing

Boeing Space Exploration

Core Stage Configuration212’ Long, 27.5’

Diameter

Boeing Space Exploration

Core Stage Assembly Flow

Building the SLS Rocket Backbone Artemis-1 Core Stage is in Final Assembly at Michoud Assembly Facility

Core Stage 1

Forward Skirt

Core Stage 1

LOX Tank

Core Stage 1

LH2 Tank

Core Stage 1

Engine Section

Core Stage 1

Intertank

SLS Core StageRoad to the Launch Pad

LH2 Tank Integration with Forward Join4/5 of Core Stage 1 Now Joined

Space Launch SystemLH2 Tank Structural Test Article – From Factory to Test Stand

Artemis-1 Uncrewed Mission

SLS Enhances Deep Space Science MissionsFastest to Deep Space – Europa Trajectory Time Example

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SLS reduces transit time to Europa by more than 4 years

Atlas V 551 SLS

PROGRAM & 85-804 OVERVIEW

NASA Exploration MissionLaunch Liability Program Objectives• Procure standalone launch liability policy for the benefit of all contractors, NASA and the US

Government that will be primary coverage below PL 85-804 indemnification

• Launch Liability policy to provide coverage for all parties in the contract chain, so each contractor

doesn’t need to procure their own insurance policy

• Obtain support for coverage and limits from NASA and all contractors and insurers

• Procure a broad policy at a reasonable cost

• Devise a premium allocation methodology that is supported by all contractors and NASA

• Reciprocal waivers to be executed by all parties including NASA

Public Law 85-804 Indemnity

• USG indemnity for Unusually Hazardous Risks (UHR’s) can be provided to contractors under FAR 52.250-1

• Indemnifies contractor against claims by third parties, loss/damage to contractor property, loss/damage to government property

• Using SLS and Orion facilitates the national defense, science and exploration objectives of the United States - reaffirmed per P.L. 115-10, NASA Transition Authorization Act of 2017

• NASA has a history of providing indemnification on previous programs (e.g. Space Shuttle, Orion Pad Abort-1)

• Launches of spacecraft have been considered Unusually Hazardous activities for which contractors have consistently been granted PL 85-804 - Consider ‘worst possible loss’, not ‘worst probable loss’.

Typical Definition of Unusually Hazardous Risks

• UNUSUALLY HAZARDOUS

For the purpose of paragraph (c) (1) of the clause at FAR 52.250-1, INDEMNIFICATION UNDER PUBLIC LAW 85-804, Alternate I (APR 1984), the following is the definition of “unusually hazardous risks”:

• (a) the burning, explosion, or detonation of propellants (liquid, solid, or gaseous), their constituent components or their degradation products during preparation, mixing, storage, or loading or use;

• (b) the burning, explosion or detonation of rocket engines or rocket motors during preparation, casting, curing, storing, testing, transporting, launch preparation, launch or use;

• (c) the burning, explosion or detonation of any flight element or components during testing, transporting, launch preparation, launch or use;

• (d) the toxic or other unusually hazardous properties of chemicals or propellants (liquid, solid, or gaseous) or inert gases, their constituent ingredients, or their degradation products or energy sources before, during and following contract activities;

• (e) the flight or surface impact of the space vehicle, and/or any flight element or components or fragments thereof, including impact of the space vehicle with other spacecraft or components or fragments thereof or with U. S. Government Property or third parties/third party property.

• The above risks are "unusually hazardous risks" to the extent such risks result from or arise out of efforts of performed under this contract. Indemnification will begin at commencement of such efforts and will end at completion of the mission.

NASA Exploration Mission

Future Option 1: Products, Premises & Launch Liability

insurance

Future Option 2: Products & Premises

Liability only

USG - NASA provided first dollar PL85-804 Indemnity

Space Shuttle (past)

USG-NASA provided PL85-804 indemnity to other contractors above

their existing aerospace product

liability limit

Contractors had various aerospace

product liability limits ranging from $500M - $1B

Acted as primary coverage against any aerospace products liability claims made

against the contractors

AA-2 (current)

Contractors have various aerospace

product liability limits ranging from $500M - $2B

Acts as primary coverage against any aerospace products liability claims made

against the contractors

Prior insurance structuresExploration Mission insurance

structures

• Interparty waivers between all parties• PL 85-804 attaches when products arrive at KSC or

CCAFB

• NASA was Launch Service Provider & retained all launch liability risk

• PL 85-804 attaches when products arrive at KSC or CCAFB

USG-NASA to provide PL85-804

indemnity to contractors above

their existing aerospace product

liability limit

PL85-804 PL85-804PL85-804PL85-804

Combined $1B Aerospace Product &

Premises Liability Limit for all

Contractors & Sub Contractors

Acts as primary coverage below

PL85-804 indemnification

NASA retains all Launch, In Space

Mission & Re-Entry liability and is not

included in insurance coverage

PL85-804Provided by USG -NASA

Combined $1B Aerospace Products & Premises Liability

Limit covering all Contractors & Sub

Contractors

Acts as primary coverage below

PL85-804 indemnification

USG-NASA provides PL85-804

indemnity to contractors above

the aerospace premises & product and launch liability

limits

Combined $500M Launch, In Space

Mission & Re-Entry Liability Limit for all Contractors & Sub

Contractors

Acts as primary coverage below

PL85-804 indemnification

NASA covered as an Additional Insured

Why One Insurance Policy?

Reasons One Insurance Policy Makes Sense for NASA

Segregates a dedicated insurance limit not subject to dilution by unrelated Contractor losses

Increased certainty & continuity of insurance limits without the stacking issue

Broad insurer support for proposed structure

Maximizes contractor leverage with insurers to obtain best terms and conditions and reduces cost

Lower insurance cost leads to lower overall cost for Exploration Mission

Offers commercial protection through insurance for NASA Launch Liability risk

Catch all for aerospace third party liability issues among parties supported by cross-waivers

Insurance certainty to support PL85-804

In the event of a claim, one policy

• Encourages all insurers, contractors and NASA to work together

• Creates efficient use of insurance defense resources

• Leverages the different relationships between Contractors and insurers to encourage faster settlement

Voluntary Settlement coverage for crew offers intriguing possibilities:

• Minimizes public relations issues

• No lawsuit from survivors estates

• No discovery, depositions, etc.

• Swift closure for all concerned parties

NASA EM Policy Wording Structure

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All Policy Wording Terms & Conditions included in this presentation are draft

language and needs to be agreed by Insurers, Prime Contractors & NASA

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Standard Space ContractsInsurer Expectation

• Best Efforts and Non-recourse

• Mutual Waivers and Hold Harmless between parties

• Single Third Party Liability Insurance policy covering all contractors

• Promulgated via the launch service contracts

• Promulgated via the commercial spacecraft construction contracts

SUBCONTRATORS

Standard Insurance for Spacecraft Owner / OperatorUS Licensed Launches

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Risk PhaseSpacecraft Liability Coverage:

Third Party Liability

Pre/Post-Launch

Spacecraft Manufacturer

Spacecraft Owner / Operator

Launch Service Provider

Subcontractors for components

Launch Launch Service Provider

In-SpaceSpacecraft Owner / Operator

Subcontractors for components

Re-EntryLaunch Service Provider

Spacecraft Owner / Operator

NASA EM Policy Wording StructureDraft Insuring Agreements

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Coverage Draft Insuring Agreement

Coverage A: Aerospace Premises & Products Liability

We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies resulting from your aerospace operations or the products-completed operations hazard.

Coverage B: SLS Mission Liability

We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies, including liability under the convention, resulting from your SLS mission activities.

Coverage C: Voluntary Settlements

Irrespective of legal liability, we shall offer to pay on your behalf, at the request of all the Named Insureds included in Item 1 of the Declarations , benefits set forth in paragraph 4 below, to or for the benefit of each astronaut who sustains bodily injury caused by an occurrence arising out of the Space Launch System (SLS).

Coverage D: Medical Payments

We will pay medical expenses as described below for bodily injury caused by an accident and resulting from the Space Launch System (SLS) or your aerospace operations provided that:1) The accident takes place in the coverage territory and during the policy period;2) The expenses are incurred and reported to us within one year of the date of the

accident; and3) The injured person submits to examination, at our expense, by physicians of our

choice as often as we reasonably require

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Let’s Get Orion Flyin’