Insurance companies safeguard, commercial spaceflight heads towards the stars and the sea

Our reporters: Leng Cuihua and Yang Xiaohan

At the start of this year, the commercial space industry experienced a surge in financing. In February, several companies such as GalaxySpace, Arrow Yuan Technology, 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 support and market demand, commercial space is rapidly shifting from a “state-led” single-track model to a more diverse development pattern with active participation from market entities. 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.

In this context, commercial space insurance has taken on 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 way forward involves breaking the traditional “post-claim” mindset and transforming toward a full-cycle management model of “risk co-management + data co-creation + industry empowerment.” This is not only a self-innovation 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 “Suggestions of the Central Committee of the Communist Party of China on Formulating the 15th Five-Year Plan for National Economic and Social Development” has included aerospace in the strategic emerging industry clusters. 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 additional frequency and orbital resources for 203,000 satellites.

Policy dividends combined with market expansion have driven 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 of them 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 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. 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), 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, 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. 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 multiple insurers jointly providing coverage for the same insured object, sharing risks initially. Reinsurance is a second layer of risk transfer, where insurers transfer part of their insurance business to other insurers to further diversify their risk exposure.

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 coordinated “property insurance + intermediary” model.

Since its establishment in March 2025, the Beijing commercial space insurance co-insurance consortium 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.

Danjia Peng, General Manager of Key Clients Department at China United Property Insurance, explained that the main types of commercial space insurance they offer include satellite insurance—covering launch and initial operation, in-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 in-orbit operation.

A relevant person from PICC P&C also noted that as China’s commercial space 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 rockets increase the density of launches, compressing verification cycles and introducing unknown risks from technological innovations. On the other hand, diversification of supply chains complicates quality control, and new risks such as space debris collisions and landing zone safety continue to surface. These risks tend to become more complex as technological innovation accelerates, posing significant challenges to co-insurance capacity and risk management.

A relevant person from Sunshine Property & Casualty Insurance (Sunshine P&C) told Securities Daily that the actuarial pricing of commercial space insurance is quite difficult. Besides the obvious risk of launch failure, insurers must also consider latent risks such as in-orbit failures, space debris collisions, cyberattacks, and cybersecurity issues. 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 dilemma of “low share, high premiums”: the coverage amounts offered are far below the actual costs of rockets and satellites, and the premiums remain high for enterprises.

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 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 reflects that the market is still in its early stages.

Moving from “pay after the event” 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” model to full-cycle risk management.

Yang Fan emphasized that the value of insurance should not only be seen in paying after accidents occur but also in early risk warning. By establishing independent underwriting and risk control standards outside of R&D and testing, insurers can identify hidden risks in manufacturing. This “insurance promotes R&D and improvement” mechanism can reduce risks from the source.

A relevant person from PICC P&C also told reporters that there is a common misconception in the industry—that insurance is merely a “risk transfer” tool. This narrow view focuses on premiums and coverage amounts, neglecting 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’s role as a long-term risk management tool and to 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 relevant person from Sunshine P&C said that as the industry matures, with more risk data accumulated and standards improved, insurance pricing will become more refined and differentiated. Meanwhile, as Chinese companies undertake more international launches, China’s commercial space insurance services will accelerate their “going global,” actively participate in the international reinsurance system, and enhance their international influence while aligning with global standards.