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

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Our reporter Leng Cuihua Yang Xiaohan

At the start of this year, a surge of financing interest has been sweeping through the commercial space sector. In February, multiple companies—including Xingji Rongyao, Jianyuan Technology, and Xinghuo Space—successively completed financing rounds. The dense deployment of capital is accelerating the pace of building liquid launch vehicles, reusable technologies, and the entire industry chain.

Driven by both policy and market, commercial space is rapidly moving beyond the single-track model led by “state-owned units,” entering a diversified development pattern in which market-based players actively step in. However, as the industrial map expands at an accelerated pace, the risk exposure in launch and operations is also increasing. Faced with high trial-and-error costs, the rigid demand for risk hedging in commercial space is rising quickly.

Against this backdrop, commercial space insurance has been given a higher mission. Multiple interviewees said that China’s commercial space insurance is still at an early stage, and the practical pain points of “low coverage share and high premium rates” urgently need to be addressed. The way forward lies in breaking the traditional “pay after the fact” mindset and transforming toward whole-cycle management of “joint risk governance + data co-building + industry enablement.” This is not only an overhaul of the insurance industry, but also the only path to safeguard the high-quality development of commercial space.

A demand for risk hedging in a market worth trillions

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

At the macro level, the “Recommendation on Formulating the 15th Five-Year Plan for National Economic and Social Development” by the CPC Central Committee lists aerospace and aviation as a strategic emerging industrial cluster. In November 2025, the National Space Administration established a dedicated Commercial Space Affairs Division, and in the “Action Plan for the High-Quality and Safe Development of Commercial Space by the National Space Administration (2025—2027),” it mentioned building a mandatory insurance system for commercial space activities.

Specifically regarding industrial layout, China’s development space for commercial space continues to expand. From December 25 to December 31, 2025, China submitted requests to ITU (International Telecommunication Union) for frequency and orbital resource filings for an additional 203,000 satellites.

With policy benefits stacking on top of market expansion, commercial space is set for explosive growth. Data from the China Business Industry Research Institute shows that from 2020 to 2024, the output value of China’s commercial space industry grew from 1 trillion yuan to around 2.3 trillion yuan. Meanwhile in 2025, China executed 92 space launches in total, of which 50 were commercial launches—making the share exceed 50% for the first time.

The rapid expansion of industry scale also means that launch risks and complexity are increasing in parallel. The demand for risk hedging is becoming increasingly urgent, and the “stabilizer” role of commercial space insurance is becoming ever more prominent.

A related person in charge from China Property & Casualty Insurance Co., Ltd. (hereinafter “PICC P&C”) told reporters from the Securities Daily that insurance is an important production input across the commercial space industrial chain. Through its professional loss compensation function, it provides stable support for enterprises’ ongoing reproduction. Insurance can offer an all-in-one package covering property, personnel, liability, freight, and more across the entire industrial chain.

Not only that, insurance also plays a multiplier effect in supply-chain coordination and at the financing end. Jiang Han, a senior research fellow at Pan Gu Think Tank (Beijing) Information Consulting Co., Ltd., told reporters from the Securities Daily that insurance is not only a risk fallback tool, but can also drive supply-chain upgrades. For example, by requiring satellite manufacturers to purchase quality liability insurance, it will force them to improve product reliability. At the same time, the risk data accumulated by insurers can also feed back into technology iteration, ultimately forming a “insurance—data—improvement” closed loop.

Yang Fan, general manager of Beijing Paipaiwang Insurance Brokerage Co., Ltd., added that insurance can also effectively enhance enterprises’ financing credit. In the financing market, satellite assets are often characterized by high value, high risk, and difficult-to-regulate features, making it hard for traditional financial institutions to directly use them as collateral. A well-designed insurance solution can cover risks across the entire life cycle of satellite launch and on-orbit operations, converting satellite assets into eligible collateral that banks can accept. This “insurance + financing” model has been widely used in the industry, helping multiple companies complete large-scale constellation networking through bank loans.

Co-insurance and reinsurance—pooling force to spread risk

Given the characteristics of commercial space insurance underwriting targets—high value and high risk—the insurance industry mainly adopts “grouping” models such as co-insurance and reinsurance to pool strength and spread risk.

Co-insurance is the first transfer of risk: multiple insurance companies jointly provide insurance coverage for the same underwriting target, sharing the risk together. Reinsurance is the second transfer of risk: it refers to the insurer partially transferring the insurance business it has assumed to other insurers in the form of reinsurance, further diversifying its own risk.

From a practical perspective, in March 2025, under the guidance of relevant regulatory authorities in Beijing, 17 property and casualty insurance institutions in Beijing, 2 reinsurance institutions, and 1 insurance intermediary institution jointly formed the country’s first commercial space insurance co-insurance pool—“Beijing Commercial Space Insurance Co-insurance Pool”—which means China’s commercial space insurance risk-sharing system has entered a new stage of specialized development.

According to a related person in charge from the Beijing Bureau of the National Financial Regulatory Administration, the above co-insurance pool adopts a two-tier structure of “direct insurance + reinsurance” in its organizational setup to ensure that overall underwriting capacity is stable and reliable. On the basis of setting entry thresholds, it dynamically adjusts the member structure and flexibly matches the risk characteristics of different space projects with insurance resources. In terms of the service system, through a coordinated linkage model of “P&C insurance + intermediaries,” it provides space enterprises with a one-stop insurance solution.

Data shows that since the co-insurance pool was established in March 2025 up to the end of that year, the Beijing Commercial Space Insurance Co-insurance Pool had provided risk coverage of nearly 7.7 billion yuan for 17 space launch projects.

The dilemma of “low coverage share, high premium rates” awaits resolution

Although the market outlook is broad, commercial space insurance still faces many constraints in real-world implementation.

Yang Yaopeng, general manager of the important customer department at China United Property & Casualty Insurance Co., Ltd., introduced that currently the commercial space insurance business operated by his company mainly has two categories: first, satellite insurance, covering launch and initial operation insurance, as well as on-orbit lifetime insurance; second, rocket insurance, including pre-launch insurance, launch insurance, and third-party liability insurance for satellite rocket launches, comprehensively covering risks across the entire process from pre-launch testing and debugging to on-orbit operations.

The related person in charge from PICC P&C mentioned above said that in China’s commercial space development process, various types of risks will gradually emerge, making challenges and opportunities intertwined and highlighting. On one hand, the acceleration of low-orbit satellite constellation networking, the dense initial flights of heavy-lift reusable rockets, and the transition of space launches into a high-frequency normalized stage compress the technology iteration and verification cycle, while unknown risks brought by multiple innovative technologies continue to expand. On the other hand, supply-chain diversification increases the difficulty of quality control, and new types of risks such as collisions involving space debris and safety in the drop zone keep emerging. The characteristic that “the more aggressive the technological innovation, the more complex the risk chain” in how these risks manifest brings considerable challenges to the underwriting capacity and risk control of the co-insurance pool.

A related person in charge from Sunlight Property Insurance Co., Ltd. (hereinafter “Sunlight P&C”) told Securities Daily reporters that the difficulty of actuarial pricing for commercial space insurance is relatively high. Besides the core explicit risk of launch failure, insurers also need to fully consider implicit risks such as on-orbit operating malfunctions, collisions with space debris, cyberattacks, and information security. The increased uncertainty of various risks makes it harder to price products and also sets higher requirements for insurers’ risk assessment capabilities.

With multiple factors stacking together, China’s commercial space insurance market has, to a certain extent, encountered an awkward situation of “low coverage share and high premium rates”: the insured amount provided is far below the actual construction cost of rockets and satellites, while enterprises’ insurance costs remain high.

The related person in charge from Sunlight P&C analyzed that behind the phenomenon of “low coverage share and high premium rates” there are multiple reasons. First, risks are highly concentrated, and domestic insurers’ capacity to retain risk is limited; to prevent pressure from large-scale claims, they can only adopt a defensive strategy of reducing insured amounts and raising premium rates. Second, the industry still lacks unified risk assessment standards and information disclosure mechanisms, making it difficult for insurers to accurately “profile” the risks, so they can only price conservatively. Objectively, this reflects that the market is still in its early stage.

From “paying after the fact” to “joint risk governance”

Given the limitations of the early-stage market, commercial space insurance urgently needs to integrate deeply with the industrial chain, upgrading from single “pay after the fact compensation” to “whole-cycle risk management.”

Yang Fan emphasized that the value of insurance should not only be about being the “payer” after an accident occurs, but should be reflected in front-end risk early warning. By establishing underwriting and risk-control standards independent of research and development testing, insurers can identify hazards in the manufacturing process. This mechanism of “using insurance to promote R&D and using insurance to promote improvements” can lower the probability of risks from the source.

The related person in charge from PICC P&C also told reporters that in the commercial space insurance field there is currently a prominent cognitive bias—over-equating insurance with a “risk transfer” tool. It focuses one-sidedly on premiums and insured amounts, while ignoring the strong correlation between premium rates and indicators such as rocket reliability and number of launches, and overlooking that insurance is a whole-cycle, long-term risk management tool. To break the stalemate, it is necessary to clearly define insurance’s position as a long-term risk management tool and build a collaborative model of “joint risk governance + data co-building + industry enablement.” Through deep binding, it helps enterprises improve risk control, accumulate data, and iterate technologies, ultimately achieving a win-win outcome.

Looking ahead, the related person in charge from Sunlight P&C said that as the industry matures, risk data accumulates, and industry standards improve, insurance pricing will inevitably move toward greater refinement and differentiation. At the same time, as domestic companies take on more international launch orders, China’s commercial space insurance services will also accelerate “going global,” deeply participating in the global reinsurance system, and continuously enhancing international discourse power while aligning with international standards.

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Editor: Gao Jia