No, the NASA Crew Resupply Services missions, and government payloads in general do not carry launch or satellite/space operations insurance. Commercial satellite operators (typically just large space telecom companies) often purchase launch insurance but it doesn’t work like automobile or home insurance; instead of being underwritten by bank or company based upon an actuarial evaluation, launch insurance is basically high risk parimutuel betting for very wealthy people with little poor math skills. Insurance is provided by a contract agent like Lloyd’s of London and backed by a small bond (usually 3% to 5% of the maximum claim amount). Upon failure, the injured party generally has to sue the guaranteer for more than the bond amount, and such suits often last years and sometimes decades, with the lawyers getting most of the reimbursement. (I know as of at least a few years ago there was at least one suit that had been going on since a launch failure in the 'Eighties.)
Instead of buying insurance high value NASA and Air Force launch vehicles provide what is termed launch or mission assurance, in which an independent team (generally Aerospace Corporation and/or private contractors) reviews design information, vehicle and subsystem test and integration (T&I) data, material and component manufacturing certifications, and (depending on type of program support) may perform independent mission analysis, software IV&V, and detail performance analysis of components and systems. This has been the traditional mode of assuring launch vehicle reliability and can be statistically demonstrated to improve reliability by around 50% to 80% over launches conducted without mission assurance support. Unfortunately, doing all of this work (in parallel to what is already done by the launch vehicle integrator) is often viewed as redundant and unnecessary until a failure occurs due to an oversight in analysis or testing that should have been reviewed more thoroughly.
There is actually a significant difference in those numbers as can be seen in the table below (based upon a first level Bayesian estimate of probability of success). Before CRS-7 (the 14th flight of the Falcon 9v1.1 vehicle) it had a predicted P=0.93 (93% probability of successful flight). With one failure in 14 flights, it now has a P=0.88, which is considered marginal. (We generally like to see P>0.95 to be considered high reliability, which F9v1.1 hadn’t had enough flights to achieve even before this failure.) One failure in 25 flights gives a predicted reliability of P=0.93, and at one failure in 65 flights the predicted reliability is P=0.97. You can see how these compared to other launch vehicles at Ed Kyle’s Space Launch Report (scroll down to see the summary of all operating vehicles, and there are tables for previous years going back to 1998).
Probabilty of success p of flights for given number of flights with f failures
n\f 0 1 2 3
0 0.50
1 0.67 0.33
2 0.75 0.50 0.25
3 0.80 0.60 0.40 0.20
4 0.83 0.67 0.50 0.33
5 0.86 0.71 0.57 0.43
8 0.90 0.80 0.70 0.60
10 0.92 0.83 0.75 0.67
12 0.93 0.86 0.79 0.71
13 0.93 0.87 0.80 0.73
14 0.94 0.88 0.81 0.75
15 0.94 0.88 0.82 0.76
20 0.95 0.91 0.86 0.82
25 0.96 0.93 0.89 0.85
50 0.98 0.96 0.94 0.92
65 0.99 0.97 0.96 0.94
100 0.99 0.98 0.97 0.96
Probability p of k successes in n attempts
p = (k+1)/(n+2) = (n-f+1)/(n+2)
with f = n - k
Of course, these are summary statistics based upon just launch volume and number of failures without consideration to sequence or type of failures. It is a valid point that the “infant mortality” of systems often leads to early failures as essential design flaws or operational limitations are discovered, and thirteen successful flights of the Falcon 9v1.1 (which is a very different vehicle from the predecessor Falcon 9) is actually a pretty phenomenal record that certainly beats the odds versus most other families for the first ten flights, in which there is almost inevitably one failure or major mission anomaly; in fact, I can only think of two other vehicle families with a comparable number of flights which have achieved that record of initial success, which can only be attributed to the hard work and expertise of the engineers working on the system.
However, SpaceX also had a number of substantial anomalies on many of those flights and has always operated under the notion that the trade of risk to increase throughput and reduce cost is worthwhile, and to the extent that their customers are cognizant of and in agreement with the risk, it is a reasonable way to approach reduction of launch cost. The high cost of conventional launch systems is, in part, because of the low risk tolerance and desire to do every possible thing to mitigate launch failures. (Unfortunately, most launch failures that do occur, at least in the last few decades, like the O-ring blowby on Challenger and failure of the RCC leading edge TPS on Columbia, are due to known problems that the launch operator has come to view as low risk despite the potential high criticality of a failure or lack of understanding about the nature of the possible failure modes.) Unfortunately, applying the kind of “80/20” approach still leaves the potential for low probability but high criticality failures, and rocket launch vehicles have thousands of components which have to perform critical functions in a specified sequence within a narrow range of parameters against which only very limited redundancy or resiliency against failure can be provided. You’d like to believe that you’ll pick up design problems in functional and margin testing and T&I problems with good people and processes, but in many aspects there is nothing short of an actual flight environment and conditions to rigorously test a system, and even at that no single flight will stress every aspect of the system, so like any other complex system, a large amount of experience is required to achieve true realized (instead of just predicted) reliability.
Rendering a spastic, off the cuff judgement about the future of SpaceX or commercial spaceflight in general based upon a couple of recent failures is just not warranted or justifiable at this point. This business has always been–and will remain for the foreseeable future of propulsion technology–one of flying at high risk of catastrophic loss with small margins and substantial uncertainty in the small population data for realized reliability; the notion that any conventional space launch system is going to become “commoditized” akin to automobiles or commercial air travel without substantial advances in materials, propulsion systems, and avionics, (and a high volume of flight to identify design flaws and reliability problems) is a fantastic and unreasonable expectation. We don’t know what caused the CRS-7 failure yet and may not know for weeks, the delay not being that SpaceX doesn’t have adequate telemetry to evaluate the vehicle operation (the Falcon 9 is one of the most highly instrumented launch vehicles I’ve seen) but rather they have an enormous amount of data to look through and no immediately apparent root cause. Even if the cause is some fundamental flaw in the system (which somehow wasn’t stressed for the first thirteen flights) it is probably fixable by redesign, and it isn’t as if SpaceX is adverse to making substantial changes in the vehicle almost literally on the fly. If it is an incidental failure (e.g. some kind of procedural misstep or bad flight code) it may be possible to flight the same design indefinitely with just minor changes.
Regardless, I have little doubt that SpaceX will continue to fly; it’s just a question of what it takes to regain confidence in payloaders versus flying on the substantially more expensive EELV or Ariane (or other) vehicles. The larger question is ability of SpaceX to come anywhere close to their advertised launch costs (which have been incrementing upward and only represent basic manifesting without the additional payload services or access to test and integration data to perform assurance activities) while clearing a sustainable profit. I remain dubious that even if SpaceX does recover the first stage (which I give odds that they’ll be successful within the next three to five attempts) that they’ll be able to substantially reduce costs below what they’re currently charging as the majority cost is in the T&I effort rather than propulsion system and stage manufacture. Even at the current price point, however, SpaceX is forcing the United Launch Alliance (the current provider of Delta IV and Atlas V vehicles) to both reduce costs and increase potential launch volume, as well as providing an alternative vehicle, all of which are valuable and worth weathering a single (or even several) launch anomalies.
And assuring future reduced-cost access to space for critical space services and industry, with the eventual goal of having a sustainable presence beyond Earth orbit by accessing and utilizing space-based resources for raw materials (at least propellants and other consumables) is key to more wide scale exploration and exploitation of the vast untapped resources in the rest of the solar system, which is an avenue that has been poorly supported by existing governmental space programs which are primarily focused on national prestige and surveillance/military activities with a smattering of pure and applied science missions thrown in to keep the poindexters happy. If not SpaceX, then some commercial enterprise needs to achieve this threshold because even after five decades of space “exploration” by NASA, ESA, the former Soviet Union, JAXA, and now China and India (some of it, such as the Voyager program, the Soviet Venera probes, the Hubble Telescope, Hayabusa-2, and Cassini-Huygens, not to mention the ongoing New Horizons and Dawn missions, having provided great scientific insight) we still can’t do so much as fill a canteen with water from a space-based source, much less make use of commodity and rare metals or utilize fissionable materials and hydrocarbons that are readily available without contributing pollution to our planet’s ecosystem.
Stranger