Insurance companies safeguard, commercial spaceflight heads towards the stars and the sea

Our reporters: Leng Cuihua, Yang Xiaohan

At the start of this year, the commercial space industry experienced a wave of financing. In February, several companies such as GalaxySpace, Arrow Yuan Technology, and Spark Space completed funding rounds. The concentrated capital deployment has accelerated the development of liquid launch vehicles, reusable technologies, and the entire industry chain.

Driven by both policies and market forces, commercial space is rapidly moving beyond the “state-led” single-track model into a diversified development pattern with active participation from market entities. However, as the industry expands quickly, the risks associated with launches and operations are also increasing. Facing high costs of trial and error, the demand for risk hedging in commercial space is rising sharply.

Against this backdrop, commercial space insurance has been entrusted with greater responsibilities. Several interviewees stated that China’s commercial space insurance is still in its early stages, with the current issues of “low market share and high premiums” needing urgent solutions. The key to breaking the deadlock lies in shifting from traditional “post-claim” thinking to a full-cycle management model based on “risk co-management + data co-creation + industry empowerment.” This is not only a self-revolution for the insurance industry but also an essential path to support high-quality development in commercial space.

Trillion-level Market’s Urgent Need for Risk Hedging

In recent years, China’s commercial space industry has maintained rapid growth. Top-level policy support systems have been continuously improved, injecting strong momentum into the industry and opening up broad market space for commercial space insurance.

On a macro level, the “Proposal of the Central Committee of the Communist Party of China on Formulating the 15th Five-Year Plan for National Economic and Social Development” includes aerospace as a strategic emerging industry cluster. In November 2025, the China National Space Administration (CNSA) established a dedicated Commercial Space Department, and in the “Action Plan for Promoting High-Quality and Safe Development of Commercial Space (2025–2027),” it mentions establishing a mandatory insurance system for commercial space activities.

Regarding industry layout, China’s commercial space development continues to expand. From December 25 to December 31, 2025, China submitted an application to the International Telecommunication Union (ITU) for frequency and orbital resources for an additional 203,000 satellites.

The combination of policy benefits and market expansion has driven explosive growth in commercial space. According to data from the China Business Industry Research Institute, from 2020 to 2024, the output value of China’s commercial space industry increased from 1 trillion yuan to about 2.3 trillion yuan. Meanwhile, in 2025, China conducted 92 space launches, with 50 of them being commercial launches—marking the first time commercial launches exceeded 50%.

The rapid industry expansion also means increased launch risks and complexity. The demand for risk hedging is becoming more urgent, and the stabilizing role of commercial space insurance is increasingly evident.

A relevant person from PICC Property and Casualty Company Limited (hereinafter “PICC P&C”) told Securities Daily that insurance is a vital element in the commercial space industry chain. It provides stable support for continuous production through professional loss compensation functions. Insurance can offer comprehensive solutions covering property, personnel, liability, and cargo for the entire industry chain.

Moreover, insurance also plays a multiplier role in supply chain coordination and financing. Jiang Han, senior researcher at Pangu Think Tank (Beijing) Information Consulting Co., Ltd., told Securities Daily that insurance is not only a risk mitigation tool but also a driver for supply chain upgrades. For example, requiring satellite manufacturers to purchase quality liability insurance will push them to improve product reliability. Additionally, risk data accumulated by insurers can feed back into technological iteration, forming a closed loop of “insurance—data—improvement.”

Yang Fan, General Manager of Beijing PaiPaiWang Insurance Agency Co., Ltd., added that insurance can effectively enhance corporate creditworthiness in financing. In the financing sector, satellite assets are often high-value, high-risk, and difficult to monitor, making it hard for traditional financial institutions to use them as collateral directly. Well-designed insurance plans can cover risks throughout the satellite’s entire lifecycle, turning satellite assets into acceptable collateral for banks. This “insurance + financing” model has been widely applied in the industry, helping many companies secure large-scale constellation networks through bank loans.

Joint Insurance and Reinsurance to Disperse Risks

Given the high value and high risk of commercial space insurance targets, the industry mainly adopts co-insurance and reinsurance models to share risks collectively.

Co-insurance involves risk transfer among multiple insurers providing coverage for the same insured object, sharing the risk jointly. Reinsurance is a second layer of risk transfer, where insurers transfer part of their insurance business to other insurers to further disperse their own risk.

Practically, in March 2025, under the guidance of relevant regulatory authorities in Beijing, 17 property insurance companies, 2 reinsurance companies, and 1 insurance intermediary formed the country’s first commercial space insurance co-insurance consortium—the “Beijing Commercial Space Insurance Co-insurance Consortium,” marking a new stage of specialized risk-sharing in China’s commercial space insurance.

According to a relevant person from the Beijing Regulatory Bureau of the China Banking and Insurance Regulatory Commission, this co-insurance body adopts a “direct insurance + reinsurance” two-tier structure to ensure robust underwriting capacity. Based on setting access thresholds, the member structure is dynamically adjusted to match the risk characteristics and insurance resources of different space projects. In terms of service, a “property insurance + intermediary” coordinated model provides one-stop insurance solutions for space enterprises.

Since its establishment in March 2025, the Beijing commercial space insurance co-insurance body has provided risk coverage for nearly 7.7 billion yuan across 17 space launch projects by the end of that year.

The “Low Share, High Premium” Dilemma Remains

Despite promising prospects, commercial space insurance still faces many obstacles in practice.

According to Dan Yaopeng, General Manager of the Important Customer Department at China United Insurance Company Limited, the company’s main types of commercial space insurance include two categories: satellite insurance—covering launch and initial operation insurance, in-orbit lifespan insurance; and rocket insurance—including pre-launch insurance, launch insurance, and third-party liability insurance for satellite launches, covering the entire process from debugging before launch to in-orbit operation.

A relevant person from PICC P&C stated that as China’s commercial space develops, various risks will gradually emerge, with both challenges and opportunities. On one hand, the rapid deployment of low-earth orbit satellite networks and the frequent first flights of reusable large-capacity rockets have led to a high-density, normalized launch phase. Technological iteration shortens validation cycles, and unknown risks from innovative technologies continue to grow. On the other hand, diversification of supply chains increases quality control difficulties, and new risks such as space debris collisions and landing zone safety issues keep emerging. These risks tend to become more complex as technological innovation accelerates, posing significant challenges to the underwriting capacity and risk control of co-insurance bodies.

A Sunlight Property & Casualty Insurance Co. Ltd. (hereinafter “Sunlight P&C”) executive told Securities Daily that the actuarial pricing of commercial space insurance is quite challenging. Besides the core explicit risk of launch failure, insurers must also consider latent risks such as in-orbit failures, space debris collisions, cyberattacks, and information security. The increased uncertainty of these risks makes product pricing more difficult and raises higher requirements for insurers’ risk assessment capabilities.

Under multiple factors, China’s commercial space insurance market faces the dilemma of “low share and high premiums”: the coverage amounts offered are far below the actual costs of rockets and satellites, while the premiums paid by enterprises remain high.

A relevant Sunlight P&C executive explained that the reasons behind this phenomenon include: first, risk concentration—domestic insurers have limited self-retention capacity and can only adopt conservative strategies like lowering coverage limits and raising premiums to prevent huge payout pressures; second, the industry lacks unified risk assessment standards and information disclosure mechanisms, making it difficult for insurers to accurately “profile” risks, leading to conservative pricing. This objectively reflects that the market is still in its infancy.

From “Pay After the Fact” to “Risk Co-Management”

Faced with the limitations of the early-stage market, commercial space insurance urgently needs to deepen integration with the industry chain, moving from a simple “post-claim payout” model to full-cycle risk management.

Yang Fan emphasized that the value of insurance should not only be in paying after accidents occur but also in early risk warning. By establishing underwriting risk control standards independent of R&D and testing, insurers can identify hidden hazards in manufacturing. This “insurance promotes R&D and improvement” mechanism can reduce risks at the source.

A PICC P&C executive also told Securities Daily that there is a common misconception in the current commercial space insurance field—that insurance is merely a “risk transfer” tool. There is an overemphasis on premiums and coverage amounts, while the strong correlation between insurance premiums, rocket reliability, and launch frequency is often overlooked. Insurance is a full-cycle, long-term risk management tool. To break the deadlock, it is necessary to clarify insurance’s role as a long-term risk management instrument and to build a collaborative model of “risk co-management + data co-creation + industry empowerment.” Deep integration can help enterprises improve risk control, accumulate data, and iterate technology, ultimately achieving a win-win situation.

Looking ahead, a Sunlight P&C executive said that as the industry matures, risk data accumulates, and standards are improved, insurance pricing will become more refined and differentiated. Meanwhile, as domestic companies undertake more international launch orders, China’s commercial space insurance services will accelerate their “going global,” actively participate in the international reinsurance system, and enhance their international influence while aligning with global standards.