Commercial Space Launch Act: Preliminary Information on Issues to Consider for Reauthorization, Statement of Alicia Puente Cackley, Director, Financial Markets and Community Investment, Testimony Before the Subcommittee on Space, and Aeronautics, Committee on Science, Space, and Technology, House of Representatives [open pdf - 418KB]
"A catastrophic commercial launch accident could result in injuries or property damage to the uninvolved public, or 'third parties.' In anticipation of such an event, a launch company must purchase a fixed amount of insurance for each launch, per calculation by FAA [Federal Aviation Administration]; the federal government is potentially liable for claims above that amount up to an additional $1.5 billion, adjusted for inflation, subject to congressional appropriations. As of 2012, the inflation-adjusted amount is about $2.7 billion. CSLA [Commercial Space Launch Act Amendments of 1988] provides for this payment, called indemnification. The indemnification provision, unless reauthorized, expires this year. This testimony provides preliminary information on, among other things, (1) a comparison of the U.S. government's indemnification policy to policies of other countries, (2) the federal government's potential costs for indemnification, (3) the ability and willingness of the insurance market to provide additional coverage, and (4) the effects of ending indemnification on the competitiveness of U.S. launch companies. This testimony is based on ongoing work that includes a review of FAA data and documents and relevant literature and interviews with officials from FAA, National Aeronautics and Space Administration, insurers, brokers, launch companies, launch customers, risk modelers, and experts."
Government Accountability Office: http://www.gao.gov/