I hope that whatever "aerospace industry expert" assured the insurance company that there was little chance that the X-Prize could be won has trouble finding further consulting work.

A perfect example of when it's ok to take advantage of other people's foolishness.

Is there a link to somewhere where this aerospace expert's advise has been described?

Unfortunately, no. It's only rumor (which I got from someone who should know. Hint: a very highly placed individual at the Ansari X-Prize Foundation, who is familiar with the due diligence performed by the insurance company...)

Obviously the "expert" didnt expect heavy artillery to step in.
Leaving Rutan-Allen tandem aside, winning the prize in time would have been a close call. All the other efforts look like they could use a full year of building before attempting what SS1 has done now.

Rand,

I suppose the question is: how much did the foundation pay for the insurance? I mean, if I'm 83, cancer and have a pack-and-a-half cigarette habit*, someone will underwrite a term life policy, provided that I pay something approaching 100% of the pay-out.

Depending on how much Xprize paid for it, it might not have been a bad deal for the ins. company, since the prize was to terminate at 12/31/04...

*transactions costs excepted, your results may vary.

I believe that the amount put up for the policy was about five million.

The other question would be when the $5 large was put up. The insurance company would have invested it to offeset their loss. So the money would have grwon considerably, even given the large dip in the market (and subsequent resurgence).

Well, I know the reason it's the Ansari X Prize is because the Ansari family stepped in relatively late (last year?) and paid the final insurance premium. So it wasn't all paid in advance when the Prize was started.

I wonder how easy it will be for the next prize group to get backing from an insurance company. Maybe Rutan made it look too easy from the point of view of the insurance guys, and future prize groups will either have to set the bar higher or fund their prizes completely from donations and their own pockets.

Although, all things considered, setting the bar even higher and still having plenty of response could turn out to be all to the good.

I found a couple of articles on this. From Dreams-turned-schemes launch one spaceworthy rocket ship:

No one would say how much the Ansaris ponied up to get their name on the prize, but tax documents show that in 2002, the X Prize organization had raised $2.6 million in contributions. In the previous five years, Diamandis had managed to raise an average of only $379,000 annually.

Another article that has a few other details:

Space Race II Looking for a hole in one

I'm just very very happy it worked out. It feels like the future space development I expected when I was young is getting back on track. Now on to private orbital flights ...

I ran almost all of my purchases over the last 6 years through an X-Prize affiliated VISA, so I helped put some cash into the whole enterprise.

Maybe Rutan made it look too easy from the point of view of the insurance guys, and future prize groups will either have to set the bar higher or fund their prizes completely from donations and their own pockets.

I actually think that it was a win-win situation in terms of prize funding either way. If attempts were made but they failed, then the chances of getting an insurance-covered prize would still be pretty high. If they won (which, of course, we know they did), it would make private and public fund-raising that much easier.

So yes, while it might make it harder to get an insurance company to pony up cash for prize money in the future, other sources of funding will more than likely greatly outweigh the "loss".

No, if the guy predicted the odds of the prize being won were something like 2-1 against (which accounts for the premium/payout ratio), he made a pretty good assessment, I think. It was, in the end, barely won, and winning it required the unusual confluence of a wealthy man (Allen) and an aeronautical genius (Rutan). It's great that it was won, and won so elegantly, but we should not forget that it was also a very lucky thing.

Indeed, I hope the guy finds more work. This nascent industry needs accurate forecasts of financial risk and benefit. No wild-eyed dreamers, who will set the infant industry up for a dot-com style crash and burn, and none of the sourpuss narrow-minded pessimists who have graduated from 'If man was meant to fly he'd have been born with wings' to 'If man is meant to go to space it will always be by means of giant government projects.' God save us from them both, and give us sensibly cautious optimism instead.

The fact that the remaining contestants are still working on their projects and still plan on launching before the end of the year shows that this isn't just a rich man's endeavour. I think it's a little off-base to imply that Burt was the only one who had a chance at winning, and that nobody else can possibly launch successfully before the end of the year.

Here's hoping that Armadillo and DaVinci can prove that this isn't just "a rich man's lucky endeavour".

Da Vinci could do it in theory, but Armadillo's not in the running at all for this year--John admitted as much as Space Access in April. He doesn't have a launch license for his vehicle, and none of his planned launch sites have site licenses, either. He can't do it in Mojave, because they're only licensed for horizontal takeoff/land, and the other sites, like Oklahoma and White Sands, don't have their environmental assessments done, or the money to pay for them. That's one of the reasons that it's important to get the new launch legislation passed--it provides a slightly improved possibility of getting waivers from the National Environmental Protection Act.

> I wonder how easy it will be for the next prize group to get backing
> from an insurance company.

Commercial prize insurance is a standard business practice. Generally, it's not a question of whether you can get it, but what the premium will be. For most contests, it's pretty easy for an insurance company to calculate the odds of winning. The X-Prize was different because they had no applicable data. That may or may not be true for future contests, depending on the rules. For something like the X-Prize Cup, it's a pretty safe bet that *someone* will win (assuming there are entries), although you can't say who.

Interesting question here. Would Rutan have entered (or at least tailored his vehicle to win the X-Prize) if there wasn't a guarantee that the prize would exist? Diamondis and company has kept a very tight wrap on the actual finances of the X-Prize organization. It's possible that we're seeing the economic principle of "moral hazard" in action.

He most certainly would not - and in fact DID not until Diamandis raised the necessary $10 million. Prior to that Rutan publicly stated that a) until X-Prize is fully funded he is not interested, and b) once it is fully funded, he will win it within 18 months. Which is more or less what happened.

poker Have a nice day! :)