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 space industry experienced a wave of financing. In February, several companies including GalaxySpace, Arrowtech, and Spark Space completed funding rounds. This concentrated capital deployment has accelerated the development of liquid propulsion rockets, reusable technology, and the entire industry chain.

Driven by both policy and market forces, commercial space 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 space is rising sharply.

Against this backdrop, commercial space insurance has been assigned a greater mission. Several interviewees stated that China’s commercial space 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” 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 space.

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 industry and opening up broad market space for commercial space insurance.

On a macro level, the “Proposal for the 15th Five-Year Plan for National Economic and Social Development” by the Central Committee of the Communist Party of China includes aerospace as a strategic emerging industry cluster. In November 2025, the China National Space Administration (CNSA) established a dedicated Commercial Space Department, and in the “High-Quality and Safe Development Action Plan for Commercial Space (2025–2027),” it mentions establishing a mandatory insurance system for commercial space activities.

Regarding industry layout, China’s commercial space 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 dividends combined with market expansion are driving explosive growth in commercial space. Data from the China Commercial Industry Research Institute shows that from 2020 to 2024, the industry’s output value 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 exceeded 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 space insurance is increasingly evident.

A relevant person from PICC Property and Casualty Insurance Company (hereinafter “PICC P&C”) told Securities Daily that insurance is a vital element of the commercial space industry chain. Through professional loss compensation functions, it provides stable support for continuous production. Insurance can offer comprehensive solutions covering property, personnel, liability, and cargo 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), 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 PaiPaiNet Insurance Agency, 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 entire lifecycle, turning satellite assets into acceptable collateral for banks. This “insurance + financing” model has been widely applied in the industry, helping many companies secure large-scale constellation networks through bank loans.

Joint insurance and reinsurance work together to disperse risks

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

Co-insurance involves risk transfer among multiple insurers providing coverage for the same insured object, sharing the risk jointly. Reinsurance is a second layer of risk transfer, where insurers transfer part of their insurance business to other insurers to further diversify their risk.

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

According to a relevant person from the Beijing Regulatory Bureau of the China Banking and Insurance Regulatory Commission, this co-insurance body adopts a “direct insurance + reinsurance” two-tier structure to ensure robust underwriting capacity. Based on setting access thresholds, the member structure is dynamically adjusted to match the risk characteristics and insurance resources of different space projects. In terms of service, it provides one-stop insurance solutions through a “property insurance + intermediary” collaborative model.

Since its establishment in March 2025, the Beijing commercial space insurance co-insurance body has provided risk coverage for nearly 7.7 billion yuan across 17 space launch projects by the end of that year.

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

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

According to Dan Yaopeng, General Manager of Key Clients at China United Property Insurance, the main types of commercial space insurance they offer include two categories: satellite insurance—covering launch and initial operation, and in-orbit lifespan insurance; and rocket insurance—including pre-launch insurance, launch insurance, and third-party liability insurance for satellite and rocket launches, covering the entire process from debugging before launch to in-orbit operation.

A relevant person from PICC P&C stated that as China’s commercial space develops, various risks will gradually emerge, with both challenges and opportunities. On one hand, the acceleration of low-earth orbit satellite networks and the frequent first flights of reusable heavy-lift rockets lead to a high-density, normalized launch schedule. Rapid technological iteration shortens validation 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 safe landing zones 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 bodies.

A relevant person from Sunshine Property & Casualty Insurance Co., Ltd. (hereinafter “Sunshine P&C”) told Securities Daily that the actuarial pricing of commercial space 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 increased uncertainty of these risks makes product pricing more challenging and raises higher requirements for insurers’ risk assessment capabilities.

Under multiple factors, China’s commercial space 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 premiums paid by companies remain high.

A relevant person from Sunshine P&C analyzed that the reasons behind this include: first, risk concentration—domestic insurers have limited capacity to retain large risks and can only adopt conservative strategies like lowering coverage amounts and raising premiums to prevent huge payouts; 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 space 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-driven research and development, and insurance-driven improvement” mechanism can reduce risks at the source.

A relevant person from PICC P&C also told Securities Daily that there is a common misconception in the commercial space insurance field—that insurance is merely a “risk transfer” tool. This view overly focuses on premiums and coverage amounts, neglecting the strong correlation between insurance rates and rocket reliability, launch frequency, and other long-term indicators. Insurance is a full-cycle, long-term risk management tool. To break the deadlock, it is necessary to clarify insurance’s role as a long-term risk management instrument and to build a collaborative model of “risk co-management + data co-creation + industry empowerment.” Deep integration can help companies improve risk control, accumulate data, and iterate technology, ultimately achieving a win-win situation.

Looking ahead, a relevant person from Sunshine P&C said that as the industry matures, risk data accumulates, and standards are established, insurance pricing will become more refined and differentiated. Meanwhile, as domestic companies undertake more international launches, China’s commercial space insurance services will accelerate their “going global,” actively participating in the international reinsurance system, aligning with global standards, and continuously enhancing international influence.