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 spaceflight sector 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 spaceflight is rapidly moving beyond the “state-led” single-track model into a diversified development pattern with active market participants. 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 spaceflight is rising sharply.

Against this backdrop, commercial spaceflight insurance has been entrusted with greater responsibilities. Several interviewees noted that China’s commercial spaceflight 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 away from traditional “post-claim payout” thinking toward a full-cycle management model of “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 spaceflight.

Trillion-yuan-level market demand 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 sector and opening up broad market space for commercial spaceflight insurance.

On a 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” includes aerospace as a strategic emerging industry cluster. In November 2025, the China National Space Administration (CNSA) established a dedicated Commercial Spaceflight Department, and in the “High-Quality and Safe Development Action Plan for Commercial Spaceflight (2025–2027),” it mentions establishing a mandatory insurance system for commercial space activities.

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

Policy benefits combined with market expansion are driving explosive growth in commercial spaceflight. Data from the China Commercial Industry Research Institute shows that 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 being commercial launches—marking the first time commercial launches accounted for over 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 spaceflight 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 spaceflight industry chain. It provides stable support through professional loss compensation functions, ensuring continuous production for enterprises. Insurance can offer comprehensive solutions covering property, personnel, liability, and cargo risks across 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 fallback 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 PaiPai Network 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 launch and on-orbit lifecycle, converting satellite assets into acceptable collateral for banks. This “insurance + financing” model has been widely adopted in the industry, helping many companies secure large-scale constellation networks through bank loans.

Joint insurance and reinsurance efforts to disperse risks

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

Co-insurance involves multiple insurers jointly providing coverage for the same insured object, sharing risks; reinsurance is a second layer of risk transfer, where insurers transfer part of their risk exposure to other insurers through reinsurance agreements, further dispersing their own risk.

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

According to a relevant official from the Beijing Regulatory Bureau of the China Banking and Insurance Regulatory Commission, this co-insurance pool adopts a “direct insurance + reinsurance” dual-layer structure to ensure robust underwriting capacity. Based on established entry thresholds, the member structure is dynamically adjusted to match the risk characteristics and insurance resources of different space projects. The service system employs a “property insurance + intermediary” coordinated model to provide one-stop insurance solutions for space enterprises.

Since its establishment in March 2025, the Beijing commercial spaceflight co-insurance pool has provided risk coverage for nearly 7.7 billion yuan across 17 space launch projects.

The “low share, high premium” dilemma remains to be solved

Despite promising prospects, commercial spaceflight insurance still faces many challenges in practice.

According to Dan Yaopeng, General Manager of Key Clients Department at China United Property Insurance Co., Ltd., the main types of commercial spaceflight insurance currently offered include satellite insurance—covering launch and initial operation, on-orbit lifespan—and rocket insurance, including pre-launch, launch, and third-party liability insurance for satellite and rocket launches, covering the entire process from debugging to on-orbit operation.

A relevant person from PICC P&C also stated that as China’s commercial spaceflight 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 verification 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 are constantly 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 pools.

A Sunlight Property & Casualty Insurance official told Securities Daily that the actuarial pricing of commercial spaceflight insurance is quite difficult. 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 uncertainty of these risks increases the difficulty of product pricing and raises higher requirements for insurers’ risk assessment capabilities.

Under multiple factors, China’s commercial spaceflight insurance market faces the awkward situation of “low share, high premiums”: the insured amounts are far below the actual costs of rockets and satellites, while the costs for enterprises remain high.

A relevant Sunlight P&C official explained that the reasons behind the “low share, high premiums” phenomenon include: first, risk concentration is high, and domestic insurers have limited capacity for self-retention; to avoid huge payout pressures, they tend to lower coverage amounts and raise premiums defensively. 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.

Moving from “paying after the fact” to “risk co-management”

Faced with the limitations of the early-stage market, commercial spaceflight insurance urgently needs to deepen integration with the industry chain, shifting from a simple “post-claim payout” 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” but also as a proactive risk warning tool. By establishing underwriting and risk control standards independent of R&D and testing, insurers can identify hidden risks in manufacturing. This “insurance promotes R&D and improvement” mechanism can reduce risks at the source.

A PICC P&C official also told reporters that there is a common misconception in the current commercial spaceflight insurance field—that insurance is merely a “risk transfer” tool. Overemphasis on premiums and coverage amounts neglects the strong correlation between insurance rates and rocket reliability, launch frequency, and other long-term, full-cycle risk management indicators. To break the deadlock, it is necessary to clarify insurance as a long-term risk management tool and 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 senior executive at Sunlight P&C said that as the industry matures, risk data accumulates, and standards improve, insurance pricing will become more refined and differentiated. Meanwhile, as Chinese companies undertake more international launches, China’s commercial spaceflight insurance services will accelerate their “going global,” actively participating in the international reinsurance system, aligning with global standards, and enhancing international influence.