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

This year’s beginning sees a surge in financing within the commercial aerospace sector. In February, several companies, including Interstellar Glory, Arrow Yuan Technology, and Spark Space, completed financing rounds one after another. The concentrated capital layout has accelerated the construction pace of liquid launch vehicles, reusable technologies, and the entire industry chain.

Driven by both policy and market forces, commercial aerospace is rapidly transitioning from a “national team-dominated” single-track model to a diversified development model where market entities are actively participating. However, with the rapid expansion of the industrial landscape, the risks associated with launches and operations are also increasing. Faced with high trial-and-error costs, the rigid demand for risk hedging in commercial aerospace is rising quickly.

In this context, commercial aerospace insurance has been assigned a higher mission. Multiple interviewees indicated that China’s commercial aerospace insurance is still in its early stages, with the urgent need to address the “low share, high premium” pain points. The way forward lies in breaking the traditional “post-event compensation” mindset and transitioning to a full-cycle management model of “risk co-management + data co-construction + industry empowerment.” This is not only a self-reform of the insurance industry but also an essential path to safeguard the high-quality development of commercial aerospace.

The trillion-yuan market’s pressing need for risk hedging

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

At the macro level, the “Suggestions of the Central Committee of the Communist Party of China on Formulating the 15th Five-Year Plan for National Economic and Social Development” 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)” to establish a mandatory insurance system for commercial aerospace activities.

In terms of industrial layout, the development space for 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 benefits and market expansion is driving explosive growth in commercial aerospace. Data from the China Business Industry Research Institute indicates that from 2020 to 2024, the output value of China’s commercial aerospace industry increased from 1 trillion yuan to approximately 2.3 trillion yuan. Moreover, in 2025, China executed a total of 92 space launches, including 50 commercial launches, marking the first time that commercial launches accounted for more than 50%.

The rapid expansion of the industry scale also means that launch risks and complexities are increasing. The demand for risk hedging is becoming increasingly urgent, and the “stabilizer” 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 Property Insurance”) told the Securities Daily reporter that insurance is an important production factor in the commercial aerospace industry chain. Through its professional loss compensation function, it provides stable support for the continuous reproduction of enterprises. Insurance can provide a comprehensive solution covering property, personnel, liability, and cargo for the entire industry chain.

Moreover, insurance also plays 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 reporter that insurance is not only a risk mitigation tool but can also promote supply chain upgrades. For instance, requiring satellite manufacturers to insure quality liability can compel them to improve product reliability. At the same time, the risk data accumulated by insurance companies can feed back into technology 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 effectively enhance a company’s financing credibility. In the financing sector, satellite assets often have high value, high risk, and are difficult to regulate, making it challenging for traditional financial institutions to accept them as collateral. A comprehensive insurance plan can cover the risks throughout the satellite launch and on-orbit lifecycle, converting satellite assets into acceptable collateral for banks. This “insurance + financing” model has been widely applied in the industry, helping several 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 insurance targets, the insurance industry mainly adopts co-insurance and reinsurance “grouping” models to collectively disperse risk.

Co-insurance is the first transfer of risk, where multiple insurance companies jointly provide insurance coverage for the same insurable target, sharing the risk; reinsurance is the second transfer of risk, where the insurer transfers part of the insurance business it undertakes to other insurers in the form of reinsurance, further dispersing its own risk.

From 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 Beijing jointly formed the country’s first commercial aerospace insurance co-insurance body—the “Beijing Commercial Aerospace Insurance Co-Insurance Body,” marking a new stage of professional development for 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 remains stable and reliable. Based on established entry thresholds, it dynamically adjusts member structures to flexibly match the risk characteristics of different aerospace projects with insurance resources; in terms of service systems, it provides one-stop insurance solutions for aerospace enterprises through a “property insurance + intermediary” linked 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.

The predicament of “low share, high premium” needs resolution

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

According to Shan Yaopeng, general manager of the key accounts department at China United Property Insurance Company, the commercial aerospace insurance currently operated by the company mainly falls into two categories: one is satellite insurance, covering launch and initial operation insurance as well as on-orbit lifespan insurance; the other is rocket insurance, including pre-launch insurance, launch insurance, and third-party liability insurance for satellite rocket launches, comprehensively protecting risks from pre-launch debugging to on-orbit operation.

The aforementioned person in charge at PICC Property Insurance stated that as China’s commercial aerospace develops, various risks will gradually surface, highlighting the intertwining of challenges and opportunities. On one hand, the accelerated deployment of low-Earth orbit satellite networks and the concentrated first flights of high-capacity reusable rockets lead to a high-density normalization stage for space launches, with technological iterations compressing verification cycles, continuously amplifying unknown risks brought by various innovative technologies; on the other hand, the diversification of supply chains increases the difficulty of quality control, with new risks such as space debris collisions and landing zone safety constantly emerging. The characteristics of these risks—“the more aggressive the technological innovation, the more complex the risk chain”—pose 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 reporter that the actuarial pricing difficulty for 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 on-orbit operational failures, space debris collisions, cyberattacks, and information security. The uncertainty of various risks increases the difficulty of product pricing and places higher demands on insurers’ risk assessment capabilities.

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

The aforementioned person in charge at Sunshine Insurance analyzed that the phenomenon of “low share, high premium” has multiple underlying reasons. Firstly, risks are highly concentrated; currently, domestic insurers have limited retention capacity, and to prevent the pressure of large indemnities, they can only adopt defensive strategies of lowering coverage and raising premiums; secondly, the industry still lacks unified risk assessment standards and information disclosure mechanisms, making it difficult for insurers to accurately “profile” risks, resulting in conservative pricing. This objectively reflects that the market is still in its infancy.

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

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

Yang Fan emphasized that the value of insurance should not only be seen as a “payer” after an accident occurs but should also be reflected in front-end risk warning. By establishing underwriting risk control standards independent of research and development testing, insurers can identify potential hazards in the manufacturing process. This “promote research through insurance, promote improvement through insurance” mechanism can reduce risk probabilities from the source.

A relevant person in charge at PICC Property Insurance also told reporters that there is a prominent cognitive bias in the current commercial aerospace insurance field, which is overly equating insurance with a “risk transfer” tool, focusing only on premiums and coverage, while neglecting the strong correlation between insurance rates and indicators such as rocket reliability and launch frequency, and 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 build a collaborative model of “risk co-management + data co-construction + industry empowerment.” By binding deeply, it helps enterprises improve risk control, accumulate data, and iterate technology, ultimately achieving a win-win situation.

Looking to the future, a relevant person in charge at Sunshine Insurance stated that as the industry matures, risk data accumulates, and industry standards improve, insurance pricing will inevitably move towards precision and differentiation. At the same time, as domestic enterprises undertake more international launch orders, China’s commercial aerospace insurance services will also accelerate “going global,” deeply participating in the global reinsurance system while continuing to enhance international discourse power while aligning with international standards.