Every ten days, on average, another rocket carrying a telecommunications satellite thunders heavenward. This satellite might be destined to become part of the international telephone network, or to provide direct-to-home television, or be designed to provide a new type of cellular phone service or Internet backbone links. Regardless of its eventual purpose, a wide range of people around the world will be focused on its progress as its fiery plume streaks upward. Flight controllers monitor its position while the manufacturers of the satellite check critical systems. The satellite owners wait anxiously to see if their critical investment will successfully reach its orbital destination. But there is another group of people, often overlooked, who also intensely monitor the fate of the rocket and satellite—the space insurance community.

It can cost hundreds of millions of dollars to build and launch a satellite. Because there is a 10 percent rocket failure...