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AI · Aerospace emerges as a new pillar industry, how can the insurance market break through?

Cailian Press, March 19 (Reporter Cao Yunyi) The 2026 government work report explicitly lists aerospace as a new pillar industry for the first time, marking the acceleration of the aerospace sector. Today, the Zhuque-2 rocket will be launched at 12 noon from the Jiuquan Satellite Launch Center.

From March to April, domestic commercial spaceflight enters a dense launch window, with three recoverable rocket launches in March boosting industry enthusiasm. Industry insiders say that the current domestic commercial aerospace industry is experiencing a golden growth period with a compound annual growth rate exceeding 25%, leading to explosive growth in insurance demand.

Cailian Press found that some insurance companies are beginning to explore more proactive “risk reduction.” A senior executive from a leading insurance company told Cailian Press that their pricing models will shift from static to dynamic, incorporating machine learning algorithms for precise underwriting, creating conditions for rate reductions.

“Risk profiling based on a company’s technological maturity, quality management certification, past launch success rates, and other factors allows for differentiated pricing.” Another insurance industry insider believes that as Chinese companies take on more international launch orders, insurance services will also “go global,” participating in reinsurance sharing worldwide.

Trillion-dollar aerospace market, yet aerospace insurance premiums only about 800 million

China’s commercial aerospace development will leap in 2026. The government work report of 2026 designates aerospace as a new pillar industry, and by the end of 2025, there are over 90,000 related enterprises in China.

“The domestic commercial aerospace industry is currently entering a golden growth period with a compound annual growth rate exceeding 25%, and insurance demand will see explosive growth,” said Shi Hequn, Deputy Secretary of the Party Committee and Director of the Group Business Department at Ping An Property & Casualty Insurance.

Meanwhile, Cailian Press’s review shows that the commercial aerospace insurance market faces common challenges: low market share and high premiums.

As China’s commercial aerospace develops, the gap in related insurance and markets widens. Data shows that the current industry scale exceeds one trillion yuan, but the insurance premium scale is only about 800 million yuan.

On one side is the potential of commercial aerospace, and on the other side are challenges faced by insurers, driven by multiple factors. First, the fundamental nature of commercial aerospace involves high-risk R&D, large capital investments, and long return cycles.

Currently, insurance can provide three core protections for commercial aerospace companies: 1) Asset loss coverage, including accidental losses of rockets, satellites, and other physical assets during R&D, testing, launch, and in-orbit operation; 2) Liability risk coverage, including third-party damage during launch, signal interference or debris fall during satellite operation, and legal liabilities; 3) Contract performance coverage, such as risks from supply chain disruptions and launch delays causing contract breaches.

However, do these products cover the entire chain? The answer is no. Industry insiders point out that current insurance gaps mainly lie in four areas: first, testing risks and prototype losses during R&D are not widely covered; second, coverage amounts during launch and in-orbit phases are often below the actual asset value, especially for high-value satellites and constellation projects; third, third-party liability insurance has high rates, leading to low corporate willingness to insure; fourth, indirect risks like supply chain interruptions and revenue losses are not insured. From R&D, manufacturing, launch, in-orbit, to third-party liabilities, there are still rigid gaps, such as supply disruptions of key components and early satellite decommissioning.

In addition to gaps, designing insurance products is also challenging. Space insurance is unique, with no reference “cases.” Since most space insurance policies are customized, lacking standardized formats, and tailored to each insured’s needs, quantification and management are difficult.

“Product design should dynamically adjust rates based on technological maturity and launch history,” said Shi Hequn. Solutions include leveraging technology for risk reduction to lower actual loss probabilities, creating conditions for rate reductions.

He believes that in the future, from an institutional perspective, insurance can provide the following core protections for commercial aerospace: 1) Asset loss coverage for rockets, satellites, and other physical assets; 2) Liability risk coverage for third-party damages and legal liabilities; 3) Contract performance coverage for risks like supply chain disruptions and launch delays.

How to address sky-high payouts? Insurers explore risk reduction through technology

For insurers, each commercial aerospace claim could mean huge payouts. Rockets and satellites are expensive, and total loss incidents are very high in aerospace insurance, differing significantly from traditional property insurance.

“Currently, domestic insurers have limited retention capacity. Major claims could impose huge financial pressure, so they tend to reduce coverage amounts and increase rates to control exposure,” said an industry insider.

“Pricing for commercial aerospace insurance is complex. Besides the obvious risk of launch failure, insurers must also consider in-orbit failures, space debris collisions, cyberattacks, and cybersecurity risks. The uncertainty of these risks increases pricing difficulty and raises the bar for risk assessment,” said a senior executive at Sunshine Property & Casualty Insurance.

Multiple factors have led to the “low share, high premium” dilemma in China’s commercial aerospace insurance market: premiums are far below actual costs, and insurers’ retention capacity is limited. To prevent huge claims, they adopt conservative strategies like lowering coverage and raising rates.

An industry expert pointed out that a common misconception is over-relying on insurance as a “risk transfer” tool, focusing only on premiums and coverage amounts, while ignoring the strong correlation between insurance rates and rocket reliability, launch frequency, and other indicators. Insurance is a comprehensive, long-term risk management tool.

Shi Hequn also admits that current challenges include rapid technological iteration making risk assessment difficult, lack of sufficient historical data affecting pricing accuracy, high coverage amounts and payout risks limiting single insurers’ capacity, international reinsurance market fluctuations affecting domestic markets, and low corporate awareness of insurance, with mandatory insurance systems still in development.

Peng Xumin, Vice President of Ping An Property & Casualty Shanghai Branch, pointed out that risks in commercial aerospace include pre-launch, launch, in-orbit operation, and third-party risks. In 2025, Ping An’s aerospace insurance risk coverage amounted to 15.23 billion yuan, with total claims of 4.255 million yuan.

To cope with the high risks that single institutions cannot bear, the industry is exploring co-insurance models. In March 2025, China’s first commercial aerospace co-insurance organization—the Beijing Commercial Aerospace Co-insurance Pool—was established. By the end of 2025, it had provided risk coverage for nearly 7.7 billion yuan across 17 launch projects.

This model offers advantages in risk diversification, pricing negotiation, and service standardization. By pooling underwriters, reinsurers, and experts in underwriting, actuarial science, and aerospace technology, it improves overall capacity and avoids overpricing or underestimating risks due to information gaps. The co-insurance pool has also established unified procedures, documentation, and claims mechanisms, enhancing customer experience and service efficiency.

However, operational issues remain, such as prolonged approval processes due to multi-party coordination, which may hinder rapid response to urgent launches; and disagreements over loss assessment and sharing ratios in disputes, affecting claims speed.

Beyond traditional “risk transfer,” some leading insurers are exploring more proactive “risk reduction” services. The core idea is to guide companies to optimize risk management from the source, reducing accident probabilities.

“With increasing launch frequency and richer data, pricing models will shift from static to dynamic, incorporating machine learning for precise underwriting. Technology can also help reduce actual loss probabilities, creating conditions for rate reductions,” suggested Shi Hequn.

Forward-looking, insurance is becoming a key lever to support sustainable aerospace development. Sunshine Insurance’s representative noted that as global attention to space sustainability grows, insurance can play a market-driven role: offering discounts for reusable rockets, non-toxic propellants, and de-orbit designs; insuring in-orbit operations for companies involved in “space debris removal,” alleviating their technical concerns; and using insurance pricing to better differentiate risks, phasing out high-risk, polluting technologies, and promoting industry toward low-carbon, recyclable, responsible paths.