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 wave of financing has surged in the commercial spaceflight sector. In February, multiple companies, including Starlink Honor, Arrow Yuan Technology, and Spark Space, completed financings in succession. The dense deployment of capital has accelerated the pace of building liquid launch vehicles, reusable technologies, and the entire industrial chain.

Driven by both policy and market, commercial spaceflight is accelerating its leap from the “nation-led” single-track model into a diversified development pattern where market-based entities actively move in. However, as the industry map expands rapidly, the risk exposures in both launching and operations have also grown. Faced with high trial-and-error costs, commercial spaceflight’s rigid demand for risk hedging is rising quickly.

Against this backdrop, commercial spaceflight insurance has been given a greater mission. Multiple interviewees said that China’s commercial spaceflight insurance is still at an early stage, and the real pain points of “low share, high rates” urgently need to be addressed. The way to break through lies in moving away from the traditional “pay after the fact” mindset and transitioning to full-cycle management of “risk co-governance + data co-building + industry enablement.” This is not only an innovation within the insurance industry, but also the only way to safeguard the high-quality development of commercial spaceflight.

A demand for risk hedging in a trillion-yuan market

In recent years, China’s commercial spaceflight industry has maintained rapid growth. As the top-level policy support framework continues to improve, it injects strong momentum into the sector, and also opens up broad market space for commercial spaceflight insurance.

At the macro level, the 《Recommendations on Formulating the 15th Five-Year Plan for National Economic and Social Development》 issued by the CPC Central Committee includes aerospace and aviation in strategic emerging industry clusters. In November 2025, the China National Space Administration specifically established a Commercial Spaceflight Department, and in 《China National Space Administration’s Action Plan for Promoting High-Quality and Safe Development of Commercial Spaceflight (2025–2027)》 it mentioned establishing a compulsory insurance system for commercial spaceflight activities.

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

With policy dividends stacking on top of market expansion, commercial spaceflight has entered a period of explosive growth. Data from the China Merchants Industry Research Institute shows that from 2020 to 2024, China’s commercial spaceflight industry output value grew from 1 trillion yuan to about 2.3 trillion yuan. At the same time, in 2025, China executed 92 space launches in total, of which commercial launches accounted for 50; for the first time, the share of commercial launches exceeded 50%.

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

A relevant person in charge at China Property & Casualty Insurance Co., Ltd. (hereinafter “CPIC P&C”) told reporters from the 《Securities Daily》 that insurance is an important production factor in the commercial spaceflight industrial chain. Through its professional loss-compensation function, it provides stable support for enterprises’ ongoing reproduction. Insurance can provide a package solution covering property, personnel, liabilities, freight, and more across the entire industrial chain.

Not only that, insurance also plays a multiplier effect in supply-chain coordination and the financing side. Jiang Han, a senior research fellow at PanGu Think Tank (Beijing) Information Consulting Co., Ltd., told reporters from the 《Securities Daily》 that insurance is not only a tool to cover the downside risk; it can also help drive supply-chain upgrades. For example, requiring satellite manufacturers to take out quality liability insurance will force them to improve product reliability. Meanwhile, risk data accumulated by insurers can also feed back into technical 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 companies’ financing credit. In the financing arena, satellite assets often have characteristics of high value, high risk, and difficult regulation, making it hard for traditional financial institutions to use them directly as collateral. A more complete insurance solution can cover the risks across the entire lifecycle of satellite launches and in-orbit operations, turning satellite assets into collateral that banks can accept as qualified assets. 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 combine forces to spread risk

Given the characteristics of commercial spaceflight insurance underwriting targets—high value and high risk—the insurance industry mainly uses “grouping” approaches such as co-insurance and reinsurance, combining efforts to spread risk.

Co-insurance is the first transfer of risk. Multiple insurance companies jointly provide insurance coverage for the same underwriting target and share the risk together. Reinsurance is the second transfer of risk: it refers to the insurer partially transferring the insurance business it undertakes to other insurers in the form of reinsurance, further dispersing its own risk.

From a practical perspective, in March 2025, under the guidance of relevant regulatory authorities in Beijing, 17 property and casualty insurance companies, 2 reinsurance institutions, and 1 insurance intermediary organization in the Beijing area jointly established the country’s first commercial spaceflight insurance co-insurance pool—the “Beijing Commercial Spaceflight Insurance Co-insurance Pool”—signaling that China’s commercial spaceflight insurance risk-sharing system has entered a new stage of specialized development.

According to a relevant person in charge from the Beijing Regulatory Bureau of the National Financial Regulatory Administration, in terms of organizational structure, the co-insurance pool adopts a two-tier system of “direct insurance + reinsurance” to ensure overall underwriting capability is steady, robust, and reliable. Based on setting entry threshold requirements, it dynamically adjusts the member structure to flexibly match risk characteristics of different aerospace projects with insurance resources. In terms of service systems, through a “property and casualty insurance + intermediary” linkage model, it provides one-stop insurance solutions for aerospace enterprises.

Data shows that since its establishment in March 2025 through the end of that year, the Beijing commercial spaceflight insurance co-insurance pool has provided risk protection of nearly 7.7 billion yuan for 17 launch projects.

The “low share, high rates” dilemma needs to be solved

Although the market outlook is broad, commercial spaceflight 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., told reporters that the commercial spaceflight insurance currently operated by his company mainly has two categories: first, satellite insurance, covering launch and initial operations insurance and in-orbit lifetime insurance; second, rocket insurance, including pre-launch insurance, launch insurance, and third-party liability insurance for satellite/rocket launches, comprehensively protecting risks across the full process—from pre-launch testing and commissioning to in-orbit operations.

The relevant person in charge at CPIC P&C said that as China’s commercial spaceflight develops, different types of risks will gradually become apparent, with challenges and opportunities intertwined and highlighted. On the one hand, the acceleration of low-orbit satellite constellation networking, the dense first launches of heavy-lift reusable rockets, and space launches entering a high-density, normalized stage compress the technology iteration and validation cycle, while unknown risks brought by multiple innovative technologies continue to intensify. On the other hand, supply-chain diversification increases the difficulty of quality control, with new risks continuously emerging, such as collisions between space debris and safety risks in landing zone scenarios. These risks exhibit the feature that “the more aggressive the technical innovation, the more complex the risk chain,” posing no small challenges to the underwriting capacity and risk prevention of the co-insurance pools.

A relevant person in charge at Sunlight Property Insurance Co., Ltd. (hereinafter “Sunlight P&C”) told reporters from the 《Securities Daily》 that the difficulty of actuarial pricing for commercial spaceflight insurance is relatively high. In addition to the core explicit risk of launch failure, insurers also need to fully consider implicit risks such as in-orbit operational malfunctions, collisions with space debris, cyberattacks, and information security. The uncertainty of various risks increases the difficulty of product pricing, and also puts higher demands on insurers’ risk assessment capabilities.

With multiple factors combined, to a certain extent, China’s commercial spaceflight insurance market has encountered the embarrassment of “low share, high rates”: the insured amount provided is far below the actual build cost of rockets and satellites, while companies’ insurance costs remain high.

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

From “paying after the fact” to “risk co-governance”

Given the limitations of the primary market, commercial spaceflight insurance urgently needs deep integration with the industrial chain, upgrading from a single “pay after the fact” approach to “full-cycle risk management.”

Yang Fan emphasized that the value of insurance should not only be about being the “payer” after an accident occurs; it should be more reflected in front-end risk early warnings. By establishing underwriting and risk-control standards independent of research and development testing, insurers can identify hidden risks in the manufacturing process. Such a mechanism of “using insurance to promote R&D, and insurance to promote improvements” can reduce the probability of risks at the source.

The relevant person in charge at CPIC P&C also told reporters that there is a prominent cognitive bias in the commercial spaceflight insurance sector: it excessively equates insurance with a “risk transfer” tool, focusing one-sidedly on premiums and insured amounts while ignoring the strong correlation between insurance rates and indicators such as rocket reliability and number of launches, and ignoring the fact that insurance is a full-cycle and long-term risk management tool. To break the deadlock, it is necessary to clarify insurance’s positioning as a long-term risk management tool and build a coordinated model of “risk co-governance + data co-building + industry enablement.” Through deep binding, it helps enterprises improve their risk controls, accumulate data, and iterate technologies, ultimately achieving a win-win outcome.

Looking ahead, a relevant person in charge at Sunlight P&C said that as the industry matures, risk data accumulates, and industry standards improve, insurance pricing will inevitably move toward greater precision and differentiation. At the same time, as domestic enterprises take on more international launch orders, China’s commercial spaceflight insurance services will also accelerate “going global,” deeply participating in global reinsurance systems, while continuously enhancing international discourse power alongside alignment with international standards.

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