* Global space insurance premiums worth roughly $500 million

* Lonestar briefed Lloyd's of London and about 25 space

insurers on space-based data storage

* Marsh says orbital AI infrastructure firms are starting

exploratory talks with insurers

By Akash Sriram and Jemima Denham

NEW YORK/LONDON, June 18 (Reuters) - Space companies have

spoken with insurers about coverage for orbital AI data centers,

a sign of early progress for an experimental industry backed by

Elon Musk's SpaceX and Jeff Bezos' Blue Origin.

The concept of data center satellites - designed to bypass

Earth's power constraints - has drawn growing attention since

Musk described them as the future of artificial intelligence

development ahead of SpaceX's record-breaking public listing

this month. Securing insurance is critical for companies trying

to move orbital data centers from concept to reality. Without

coverage for the costly hardware and risks involved, attracting

the debt financing needed to scale such ventures would be

difficult.

Blue Origin and a host of space startups, including Orbital,

Starcloud, Lonestar Data Holdings and Cowboy Space, have also

signaled their intention to launch space-based data centers.

Reuters spoke to four brokers and underwriters and three

space firms who said talks had taken place about orbital data

center coverage, although they remain preliminary.

Insurance broker Marsh said several companies have

approached insurers to understand what future coverage for

orbital data centers might entail, without naming the firms.

"We're already starting to see companies that are focused on

data centers and companies that are focused on digital

infrastructure looking to the insurance community for support,"

said Patton Kline, U.S. aviation and space practice leader at

Marsh.

Lonestar said it recently held a briefing at Marsh's offices

for insurance marketplace Lloyd's of London, attended by about

25 insurers.

SpaceX and Blue Origin did not respond to requests for

comment.

ORBITAL AI NEW FOR INSURERS

Insurers already cover launch failures, satellite malfunctions,

orbital debris and space weather in a global space market that

collects roughly $500 million in annual premiums, according to

industry executives and insurance firm Axa XL.

But while insurers have decades of experience covering

satellites, they have little data on orbital AI infrastructure.

"The conversations in the market are focused on whether the

risk can be modeled, rather than what the premium should be,"

said Kasey Roh, U.S. head of Upstage AI, which develops AI tools

for insurance companies.

Part of the challenge is valuing rapidly advancing AI chips,

which could be vulnerable to harsh conditions in space, said

Orbital CEO Euwyn Poon.

David Wade, space underwriter at Atrium, said

venture-capital-backed startups would have to expand before

there would be a major insurance market for orbital data

centers.

"Until we get past that early round of financing and start

seeing some of these companies expand by raising debt, I think

the insurance needs are very limited at the moment."