Insurance companies safeguard commercial spaceflight heading towards the stars and the sea

Reporter: Leng Cuihua, Yang Xiaohan

At the beginning of this year, a financing boom surged in the commercial aerospace sector. In February, several companies, including Interstellar Glory, Arrow Yuan Technology, and Spark Space, completed financing in succession. The concentrated capital layout has accelerated the construction pace of liquid launch vehicles, reusable technology, and the entire industry chain.

Driven by both policies and market forces, commercial aerospace is accelerating its transition from a “national team-led” single-track model to a diversified development model with active market participants. However, as the industry landscape rapidly expands, the risk exposure from launches and operations also increases. Faced with high testing costs, the rigid demand for risk hedging in commercial aerospace is rising rapidly.

Against this backdrop, commercial aerospace insurance has been given a higher mission. Multiple interviewees indicated that commercial aerospace insurance in China is still in its initial stage, with the pressing pain point of “low share and high rates” needing to be addressed urgently. The solution lies in breaking the traditional “post-event compensation” mindset and transitioning to a “risk co-management + data co-creation + industrial empowerment” full-cycle management approach. This is not only a self-reform of the insurance industry but also an essential path for ensuring the high-quality development of commercial aerospace.

Trillions-level market’s essential demand for risk hedging

In recent years, China’s commercial aerospace industry has maintained rapid growth. The top-level policy support system has continuously improved, injecting strong momentum into the industry and opening up vast market space for commercial aerospace insurance.

At the macro level, the “Suggestions on Formulating the 15th Five-Year Plan for National Economic and Social Development” issued by the Central Committee of the Communist Party of China lists aerospace as a strategic emerging industry cluster. In November 2025, the National Space Administration established a Commercial Aerospace Department and mentioned in the “Action Plan for Promoting the High-Quality and Safe Development of Commercial Aerospace (2025-2027)” the establishment of a mandatory insurance system for commercial aerospace activities.

In terms of industrial layout, the development space of China’s commercial aerospace continues to expand. From December 25 to December 31, 2025, China submitted applications to the ITU (International Telecommunication Union) for frequency and orbital resources for an additional 203,000 satellites.

The combination of policy dividends and market expansion has driven commercial aerospace to experience explosive growth. According to data from the China Commercial Industry Research Institute, from 2020 to 2024, the output value of China’s commercial aerospace industry increased from 1 trillion yuan to approximately 2.3 trillion yuan. In 2025, China executed 92 space launches, including 50 commercial launches, marking the first time the commercial launch ratio exceeded 50%.

The rapid expansion of the industry scale also means that launch risks and complexity are rising simultaneously. The demand for risk hedging is becoming increasingly urgent, and the stabilizing role of commercial aerospace insurance is becoming more prominent.

A relevant person in charge at China People’s Property Insurance Company (hereinafter referred to as “PICC”) told the Securities Daily that insurance is an important production factor in the commercial aerospace industry chain, providing stable support for enterprises’ continuous reproduction through its professional loss compensation function. Insurance can provide comprehensive solutions for property, personnel, liability, and cargo across the entire industry chain.

Moreover, insurance also exerts a multiplier effect in supply chain collaboration and financing. Jiang Han, a senior researcher at Pangu Think Tank (Beijing) Information Consulting Co., Ltd., told the Securities Daily that insurance is not only a risk cover tool but also promotes supply chain upgrades. For example, requiring satellite manufacturers to purchase quality liability insurance forces them to improve product reliability. At the same time, the risk data accumulated by insurance companies can also feed back into technological iterations, ultimately forming a “insurance-data-improvement” closed loop.

Yang Fan, general manager of Beijing Paipai Network Insurance Agency Co., Ltd., added that insurance can also effectively enhance a company’s financing credibility. In the financing sector, satellite assets often have characteristics of high value, high risk, and difficulty in regulation, making it challenging for traditional financial institutions to directly accept them as collateral. A comprehensive insurance plan can cover risks throughout the satellite launch and in-orbit lifecycle, transforming satellite assets into acceptable collateral for banks. This “insurance + financing” model has been widely applied in the industry, helping multiple companies complete large-scale constellation networking through bank loans.

Co-insurance and reinsurance work together to disperse risk

In response to the high value and high risk characteristics of commercial aerospace underwriting targets, the insurance industry mainly adopts “co-insurance” and “reinsurance” models to work together to disperse risk.

Co-insurance is the first transfer of risk, where multiple insurance companies jointly provide insurance coverage for the same underwriting target and share the risk; reinsurance is the second transfer of risk, where insurers partially transfer the insurance business they bear to other insurers through reinsurance, further dispersing their own risk.

In practice, in March 2025, under the guidance of relevant regulatory agencies in Beijing, 17 property insurance institutions, 2 reinsurance institutions, and 1 insurance intermediary institution in the Beijing area jointly established the country’s first co-insurance body for commercial aerospace insurance—the “Beijing Commercial Aerospace Insurance Co-insurance Body,” marking a new stage of professional development in China’s commercial aerospace insurance risk-sharing system.

According to a relevant person in charge at the Beijing Bureau of the National Financial Supervision and Administration, the aforementioned co-insurance body adopts a dual-layer system of “direct insurance + reinsurance” in its organizational structure to ensure overall underwriting capacity is steady and reliable. Based on setting admission thresholds, it dynamically adjusts its member structure to flexibly match the risk characteristics of different aerospace projects with insurance resources; in terms of service systems, it provides a one-stop insurance solution for aerospace enterprises through a “property insurance + intermediary” interactive model.

Data shows that since its establishment in March 2025 until the end of that year, the Beijing Commercial Aerospace Insurance Co-insurance Body has provided risk protection for 17 space launch projects amounting to nearly 7.7 billion yuan.

“Low share, high rate” dilemma remains to be solved

Despite the broad market prospects, commercial aerospace insurance still faces many constraints in practical implementation.

According to Shan Yaopeng, general manager of the key clients department at China United Property Insurance Company, the commercial aerospace insurance currently operated by the company mainly consists of two categories: one is satellite insurance, covering launch and initial operation insurance, as well as in-orbit life insurance; the other is rocket insurance, which includes pre-launch insurance, launch insurance, and third-party liability insurance for satellite-rocket launches, providing comprehensive protection for risks from pre-launch debugging to in-orbit operations.

The aforementioned PICC person in charge stated that various risks will gradually emerge during the development of China’s commercial aerospace, highlighting the intertwining of challenges and opportunities. On one hand, the accelerated networking of low-orbit satellites and the concentrated maiden flights of high-capacity reusable rockets have brought space launches into a high-density normalization stage; technological iterations are compressing validation cycles, and the unknown risks brought by various innovative technologies are continuously magnifying. On the other hand, the diversification of supply chains has increased the difficulty of quality control, and new risks such as space debris collisions and landing area safety are emerging. These risks exhibit the characteristic of “the more radical the technological innovation, the more complex the risk chain,” posing significant challenges to the underwriting capacity and risk prevention of the co-insurance body.

A relevant person in charge at Sunshine Property Insurance Company (hereinafter referred to as “Sunshine Insurance”) told the Securities Daily that the actuarial pricing difficulty of commercial aerospace insurance is considerable; in addition to the core explicit risk of launch failure, insurers also need to fully consider implicit risks such as in-orbit operation failures, space debris collisions, cyberattacks, and information security. The uncertainty of various risks increases the difficulty of product pricing and raises higher demands on the risk assessment capabilities of insurance companies.

Under the influence of multiple factors, China’s commercial aerospace insurance market has, to a certain extent, encountered the awkward situation of “low share, high rate”: the coverage provided by insurance is far lower than the actual cost of rockets and satellites, while the insurance costs for enterprises remain high.

The aforementioned Sunshine Insurance person in charge analyzed that the phenomenon of “low share, high rate” has multiple underlying reasons. First, risk is highly concentrated; currently, domestic insurers have limited self-retention capacity. To prevent the pressure of massive claims, they can only adopt defensive strategies of lowering coverage and raising rates. Second, the industry still lacks unified risk assessment standards and information disclosure mechanisms, making it difficult for insurers to accurately “portray” the risks, leading them to adopt conservative pricing. This objectively reflects that the market is still in its infancy.

Transitioning from “post-event payment” to “risk co-management”

Faced with various limitations of the nascent market, commercial aerospace insurance urgently needs to deeply integrate with the industry chain, transitioning from a single “post-event compensation” approach to “full-cycle risk management.”

Yang Fan emphasized that the value of insurance should not stop at being a “payer” after an accident occurs; it should also reflect in risk warnings at the front end. By establishing underwriting and risk control standards independent of research and testing, insurers can identify hidden dangers in the manufacturing process. This “promoting research and improvement through insurance” mechanism can reduce the probability of risks from the source.

The PICC person in charge also told reporters that there is a significant cognitive bias in the current commercial aerospace insurance sector, which overly equates insurance with a “risk transfer” tool, focusing excessively on premiums and coverage while neglecting the strong correlation between insurance rates and rocket reliability or launch frequency, overlooking that insurance is a full-cycle and long-term risk management tool. To break the deadlock, it is essential to clarify the positioning of insurance as a long-term risk management tool and to construct a collaborative model of “risk co-management + data co-creation + industrial empowerment.” Through deep binding, it can help enterprises improve risk control, accumulate data, and iterate technology, ultimately achieving a win-win situation.

Looking ahead, the Sunshine Insurance person in charge stated that as the industry matures, risk data accumulates, and industry standards improve, insurance pricing will inevitably move toward precision and differentiation. At the same time, with domestic companies undertaking more international launch orders, China’s commercial aerospace insurance services will also accelerate their “going out” strategy, deeply participating in the global reinsurance system while aligning with international standards and continuously enhancing international discourse power.