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

Byline: Leng Cuihua, Yang Xiaohan

This year at the start, a wave of fundraising heat has surged in the commercial space sector. In February, multiple companies—including Starlink Glory, Arrow Yuan Technology, and Xinghuo Space—completed financing one after another. 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 space is speeding up its transition from the single-track model dominated by “state-owned teams” to a diversified development pattern in which market-based players actively enter the field. However, as the industrial map expands rapidly, the risk exposure for launch and operations is also increasing. Faced with high trial-and-error costs, commercial space’s rigid demand for risk hedging 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 real pain points of “low shares, high rates” urgently need to be addressed. The way to break through lies in moving from the traditional “pay after the fact” mindset to a full-cycle management transition featuring “risk co-management + data co-construction + industry enablement.” This is not only an internal reform of the insurance industry, but also the inevitable path to safeguard the high-quality development of commercial space.

Risk-hedging demand in a trillion-yuan market

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

At the macro level, 《Proposals of the CPC Central Committee on Formulating the Fifteenth Five-Year Plan for National Economic and Social Development》 includes aerospace and aviation in strategic emerging industrial clusters. In November 2025, the National Space Administration specifically set up a Commercial Space Bureau, and in 《The National Space Administration’s Action Plan for Promoting High-Quality and Safe Development of Commercial Space (2025–2027)》 it also mentioned establishing a compulsory insurance system for commercial space activities.

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

With policy dividends stacking on top of market expansion, commercial space has entered a phase of explosive growth. Data from the China Business Industry Research Institute shows that from 2020 to 2024, China’s commercial space industry output value grew from 1 trillion yuan to about 2.3 trillion yuan. Meanwhile, in 2025, China carried out 92 space launches in total, including 50 commercial launches, for the first time surpassing 50% of the total.

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

A relevant executive from People’s Insurance Company (P&C) of China Co., Ltd. (hereinafter “PICC P&C”) told Securities Daily reporters that insurance is an important production factor in the commercial space industry chain. Through its professional loss-compensation function, it provides stable support for enterprises’ ongoing reproduction. Insurance can offer a package solution covering property, personnel, liability, freight, and more for the entire industrial chain.

Not only that, insurance also plays a multiplier effect in supply-chain coordination and on the financing side. Jiang Han, a senior research fellow at PanGu Think Tank (Beijing) Information Consulting Co., Ltd., told Securities Daily reporters that insurance is not only a backstop tool for risk, but can also drive supply-chain upgrades. For example, requiring satellite manufacturers to take out product quality liability insurance will push them to improve product reliability. At the same time, 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 Pǎipǎiwǎng Insurance Brokerage Co., Ltd., added that insurance can also effectively enhance companies’ financing credit. In the financing field, satellite assets are often characterized by high value, high risk, and difficulty in regulation, so traditional financial institutions find it hard to use them directly as collateral. A well-designed insurance方案 can cover risks across the full lifecycle of satellite launches and in-orbit operations, turning satellite assets into qualified collateral that banks can accept. 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 efforts work together to spread risk

Given the characteristics of high-value and high-risk underwriting targets in commercial space, the insurance industry mainly uses “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 protection for the same underwriting target, sharing the risk together. Reinsurance is the second transfer of risk: it refers to insurers partially transferring the insurance business they undertake to other insurers in the form of reinsurance, further dispersing their own risk.

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

According to a relevant executive from the Beijing Regulatory Office of the State Financial Regulatory Administration, the above co-insurance body adopts a “direct insurance + reinsurance” two-tier structure in its organizational framework to ensure that overall underwriting capacity is steady, reliable, and robust. On the basis of setting entry thresholds, it dynamically adjusts the member structure, flexibly matching the risk characteristics of different aerospace projects with insurance resources. In terms of the service system, through a “property-and-casualty insurance + intermediaries” linkage model, it provides aerospace enterprises with a one-stop insurance solution.

Data show that since its establishment in March 2025 up to the end of that year, the Beijing Commercial Space Insurance Co-insurance Body had provided risk coverage of nearly 7.7 billion yuan for 17 aerospace launch projects.

“Low shares, high rates” dilemma awaiting resolution

Although the market outlook is broad, commercial space insurance still faces many constraints during actual rollout.

A relevant executive in the Important Clients Department of China United Property & Casualty Insurance Co., Ltd. said that currently the commercial space insurance the company operates mainly has two categories: first, satellite insurance, covering launch and initial operations insurance, as well as in-orbit lifetime insurance; second, rocket insurance, including pre-launch insurance, launch insurance, and third-party liability insurance for satellite rocket launches, providing comprehensive coverage of risks from pre-launch commissioning through to in-orbit operations.

A relevant executive from PICC P&C said that in China’s commercial space development, various risks will gradually become visible, with challenges and opportunities intertwined. On one hand, low-orbit satellite constellations are accelerating, and dense first flights of reusable high-lift rockets are increasing, pushing space launches into a high-density, normalized phase. Technology iteration shortens verification cycles, and unknown risks brought by multiple innovative technologies continue to expand. On the other hand, supply-chain diversification increases the difficulty of quality control; new risks such as collisions involving space debris and safety of landing areas are emerging continuously. These risks show the characteristic that “the more aggressive the technological innovation, the more complex the risk chain,” bringing significant challenges to the co-insurance body’s underwriting capacity and risk prevention and control.

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

Under the combined effect of multiple factors, China’s commercial space insurance market, to a certain extent, has encountered the awkward situation of “low shares, high rates”: the insured amount provided is far lower than the actual production cost of rockets and satellites, while enterprises’ insurance premium costs remain high.

The above Sunshine P&C executive analyzed that behind the “low shares, high rates” phenomenon there are multiple reasons. First, risks are highly concentrated. Domestic insurers’ capacity to retain risk is limited; to prevent pressure from massive claims, they can only adopt defensive strategies such as reducing insured amounts and raising premium rates. Second, the industry still lacks unified risk assessment standards and information disclosure mechanisms. As insurers cannot accurately “profile” risks, they can only price conservatively. Objectively, this reflects that the market is still at an early stage.

From “pay after the fact” to “co-manage risk”

Facing the various limitations of an early-stage market, commercial space insurance urgently needs to integrate deeply with the industrial chain, moving from a single “pay after the fact” approach to a leap toward “full-cycle risk management.”

Yang Fan emphasized that the value of insurance should not stop at being the party that “pays the bill after an accident,” but should be reflected in risk early-warning at the front end. By establishing underwriting risk-control standards independent of R&D testing, insurers can identify hidden hazards in the manufacturing process. This “use insurance to promote R&D, and use insurance to promote improvements” mechanism can reduce the probability of risk from the source.

A relevant executive from PICC P&C also told reporters that there is a prominent cognitive bias in the current commercial space insurance sector: overly equating insurance with a “risk transfer” tool, focusing one-sidedly on premium and insured amount while ignoring the strong correlation between insurance premium rates and indicators such as rocket reliability and number of launch attempts, and ignoring 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-management + data co-construction + industry enablement.” Through deep integration, it helps enterprises improve risk control, accumulate data, and iterate technology, ultimately achieving a win-win outcome.

Looking ahead, a relevant executive from Sunshine P&C said that as the industry matures, risk data are accumulated, 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 space insurance services will also accelerate “going global,” deeply participating in the global reinsurance system. While aligning with international standards, it will continue to enhance its international voice.

(Editor: Qian Xiaorui)

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