Sir Richard and the Virgin Galactic team were at the Mojave Spaceport, in California with 800 media and guests to unveil Spaceship Two which is set to be named VSS Enterprise, the craft which will take paying customers into space for the first time in 2012.

It was designed by well know aviation designer Burt Rutan, and already in excess of 300 people who have paid the £120,000 for a ticket to be launched into space.

The craft will now undergo two years of testing before it is expected to carry commercial passengers. It will be taken to an altitude of around 50,000 feet by a mothership (White Knight Two) and then blast 65 miles into space where it will remain for several minutes giving the passengers a view of the planet before gliding back to earth.

But the big question for the insurance market has been ‘is it an aviation or space risk?’

Consensus in the London market is that despite the Galactic name it will remain in the aviation market but it will provide some interesting dynamics for the underwriters.

One broker said; “There are two issues for underwriters in terms of the Virgin Galactic programme. Firstly there had been a discussion over where the insurance would fall.

“It looks set to be a specialist aviation risk given the level of commercial passengers it plans to carry and the frequency of launch rather than a space risk which has no real history of commercial passengers.

“The technology is new for the aviation market in terms of the rocket launch and the glide factor, and of course there is a greater degree of risk given the power needed to launch the craft into the very outer atmosphere albeit for a matter of minutes.”

He added that the risks will be high and the market may take some convincing in the initial stages.

 “Underwriters will have a lack of historical data to fall back on which always makes a new risk one which will be price conservatively,” he added. “The second issue is the passengers themselves.

“At a cost of $200,000 (£120,000) per ticket the passengers are going to be high net worth individuals. They may well be prominent and successful businessmen, or sports and entertainment stars given that the ticket price is out of the reach of the average man in the street.

“It means the potential liabilities for the underwriters should there be any accident resulting in death or disablement will be extremely high.”