The biggest shortcoming of the low-altitude economy: If an eVTOL falls, who will be responsible?

Introduction: The insurance market for China's low-altitude economy is expected to reach a scale of 8-10 billion yuan in the next few years.

As more and more drones, eVTOLs/light aircraft are introduced into the urban airspace, the beautiful visions of the low-altitude economy, such as "future commuting", "air logistics", and "air rescue", quickly capture the public's imagination.

Capital, municipal governments, and startups are all increasing their investment. Aircraft are becoming lighter, flight routes are getting shorter, and there are more takeoff and landing points.

However, amidst the hustle and bustle of "takeoff", there is a key variable that determines whether this "air dream" can come true, continue to fly, and operate smoothly. It is far less glamorous than battery density and load capacity - it is hidden in insurance contracts.

Insurance is not a "small business" for insurers, but rather the "entry threshold", "safety foundation", and "liability distribution mechanism" for the low-altitude economy. It determines: when an accident occurs, who will pay the bill? Who will be responsible? Who will bear the public opinion? Who will assume legal liability?

If this insurance network cannot underwrite, cover all risks, or handle claims, aircraft may be caught in the dead end between "legal operation" and "public trust".

The future of the low-altitude economy may turn from a "trillion-dollar market" into an "air bubble".

Is the combination of the low-altitude economy and insurance being overlooked?

In the past two years, China's low-altitude economy has been repeatedly mentioned as a national strategic emerging industry.

In June 2023, the Interim Regulations on the Flight Management of Unmanned Aerial Vehicles were officially promulgated and came into effect on January 1, 2024, marking that drones and low-altitude aircraft will be systematically regulated at the legal and administrative levels.

On the same day, the Rules for the Operational Safety Management of Civil Unmanned Aerial Vehicles, led by the Civil Aviation Administration of China (CAAC), also began to be implemented, putting forward a series of regulations for the design, production, airworthiness approval, airspace management, real-name registration, and operational licensing of unmanned aerial vehicles.

Against the backdrop of lower institutional thresholds and the continuous maturity of technological samples, drone delivery, agricultural plant protection, emergency rescue, as well as test flights of light aircraft and pilot projects for general aviation services have been launched one after another. Most participants have publicly declared: "We are ready."

However, the real situation is that as the number of aircraft increases, they fly closer to the ground, and takeoff and landing points are closer to urban residential areas - the probability of accidents and liability also rises simultaneously.

Once a crash, loss of control, equipment damage, or personal injury occurs, the public safety of the city, social trust, corporate brand, capital valuation, and policy promotion... will all be questioned.

Technology can design redundant systems, automatic landing, and obstacle avoidance logic. However, when the liability chain involves manufacturers, operators, platform providers, takeoff and landing point managers, airspace regulatory agencies, pilots... and even the government approval mechanism itself, the problem is no longer "whether it can fly", but "who will pay for this flight dream".

Insurance is the touchstone for whether this answer exists.

Insurance has entered the market, but it is far from omnipotent and far from reaching its peak

Despite numerous challenges, the insurance industry has begun to respond to this demand.

Leading property insurance companies have launched or reported insurance products for the low-altitude economy, drones, and general aviation aircraft.

Ping An Property Insurance told several media outlets in 2025 that the company has launched a comprehensive solution of "low-altitude economy insurance + service + risk control" and claims to provide insurance support for agricultural drones, logistics drones, general aviation aircraft, and even manned aircraft.

Another leading insurance company, PICC Property and Casualty, has also been reported to have issued insurance policies for some manned aircraft, attempting to become the "first batch of insurers capable of underwriting new manned models such as the EH - 216S". The media said that this is the "first exclusive insurance cooperation project for low-altitude aircraft in the country".

Moreover, a market research report believes that the insurance market for China's low-altitude economy is expected to reach a scale of 8-10 billion yuan in the next few years.

In other words, the combination of insurance and the low-altitude economy is not a castle in the air or just an empty slogan. Instead, it has already started to be substantially deployed, with companies, products, regulations, and market expectations.

However, this insurance network is currently in a state of "exploration + patching + layered underwriting" and is far from forming a complete closed-loop that can withstand large-scale and complex operating scenarios.

Structural mismatch: Low-altitude enterprises want to fly, while insurance companies are afraid of paying claims

For most low-altitude economy enterprises, including insurance items first means "compliance permit + market credit + investor confidence + policy support + social trust".

They are willing to include insurance in their financing plans and rely on insurance when applying for takeoff and landing points, negotiating government subsidies, and obtaining urban licenses.

"Insurance is not only about ensuring customer safety for us, but also a safety commitment to the city, the government, and investors," a corporate executive with a general aviation pilot project plan told the media.

Insurance is the bottom line, credit, and the key to achieving commercial operation for them.

However, the attitude of insurance companies is completely different.

According to several anonymous risk control professionals in the industry, their biggest concern about underwriting the low-altitude economy currently is not whether a single aircraft will break down or whether a single flight will fail, but rather: "We simply cannot quantify the real systemic risks."

The number of unmanned aircraft, their uses, flight altitudes, takeoff and landing locations, urban density, wind field changes, stability of control links, operator qualifications, night flights, flights in complex environments... There are too many variables, making the law of large numbers, accident statistics, and risk pool models relied on by traditional insurance completely inapplicable.

An accident may be caused by equipment problems, or it may be due to environmental, operational, human, systematic, or multiple factors. Insurance companies are not afraid of paying claims, but they are afraid of "not being able to pay for the entire system".

This concern about systemic risks is a global commonality.

Looking at the advanced markets in Europe and the United States, although their insurance industries have developed relatively diverse product systems, they are also caught in the dilemma of "technological iteration being faster than the update of insurance models". When underwriting in the US insurance market, insurers often hesitate due to issues such as unclear liability and difficult - to - quantify privacy risks brought about by open - source drone technology; Europe tends to start from the perspective of systematic risk management and tries to control risks through more complex models.

Their practices jointly show that simply relying on traditional insurance actuarial models is no longer sufficient to cope with the complexity of the low - altitude economy.

Therefore, the prudence of Chinese insurance companies is not an exception. The core problem is that the global insurance industry is facing the same challenge: how to price and underwrite an emerging risk that is highly complex, dynamically changing, and lacks historical loss data.

In this context, insurance companies are more inclined to underwrite "controllable, quantifiable, low - frequency, and high - security" scenarios, such as agricultural drones, inspection drones, small - scale logistics drones, short - term test flights, and specific tasks, while remaining cautious about manned eVTOLs, large - scale urban commuting, and complex airspace operations.

This structural mismatch is not a simple contradiction but a systematic conflict.

Low - altitude enterprises hope to promote early - stage expansion and large - scale operation through insurance, while insurance companies hope to achieve stable profits through limited coverage, risk stratification, and cautious underwriting.

The difficulty of reconstructing this underlying model is the deepest obstacle in the "structural mismatch", which also means that to break the deadlock in the insurance for China's low - altitude economy, a new path that goes beyond tradition and integrates technology and risk control must be found.

Therefore, even if insurance exists, it does not necessarily mean "sufficiently safe"; even if an aircraft is capable of carrying passengers, it does not necessarily mean "acceptable to insurance companies".

This is precisely the most easily overlooked but fatal problem in the industrialization of the low - altitude economy.

Those who benefit the most are also those who want to institutionalize risks

Not everyone wants insurance to be a high - threshold requirement.

Once insurance becomes an industry entry threshold, it is a risk for many players, but for the following types of enterprises/institutions, it is a structural advantage.

General aviation/eVTOL enterprises with intensive capital, pursuing large - scale operations, and preparing for long - term operations

For these enterprises, insurance is not only a compliance certificate but also an important bargaining chip for attracting investment, applying for urban pilot projects, seeking policy support, and carrying out large - scale infrastructure construction. Insurance makes risks "rule - based", provides a more trustworthy foundation for operations, and facilitates financing and expansion.

Operators providing public services (medical logistics, emergency transportation, delivery in remote areas, infrastructure inspection, etc.)

These scenarios have the highest requirements for safety, stability, and compliance. Once an accident occurs, it will affect public safety, medical resources, and even lives. Insurance provides them with liability protection and also provides the public and the government with an expected institutional guarantee, reducing social costs.

Companies aiming to implement the "ecosystem integration + platform + service + risk control + insurance + operation" model

The future of the low - altitude economy is not about selling aircraft but about selling services, networks, and "urban - level flight infrastructure + service system + risk protection + operation and maintenance". For these players, insurance is part of the infrastructure, a risk control system, service credit, and an industry entry permit.

Small/medium - sized drone/general aviation companies with low risk tolerance, focusing on stable operations rather than wild expansion

For them, insurance provides a buffer rather than a pass. Even without large - scale expansion, they hope to maintain operational safety, reduce liability, and lower uncertainty through insurance, making their business models more sustainable.

Therefore, the combination of the low - altitude economy and insurance is not beneficial to everyone, but for players who want to operate "orderly, on a large scale, and in compliance" in the future, it is a structural and long - term strategic advantage.

Why insurance cannot be a universal key

However, insurance is not an all - powerful umbrella. At present, it can only cover a part of the risks in the low - altitude economy, not the safety of the entire system.

The first problem is the limited scope of coverage. Most of the currently publicly available insurance products are standard insurance types such as aircraft body loss, third - party liability, ground damage, cargo damage, and liability of pilots/operators.

For high - complexity risks such as operational interruption risks of manned eVTOLs, complex airspace environments, system - level loss of control, software crashes, communication link breaks, and risks of mixed takeoff and landing between urban ground and high - altitude areas, insurance companies hardly have any publicly available underwriting plans.

The industry white paper points out that these "high - frequency/high - risk/systematic" risks belong to "emerging risks", and the market has not yet formed standardized products.

The differences in aircraft, uses, scenarios, and environments are too great, and the pre - conditions for each flight are different. The accident probability, loss scale, and liability chain cannot be calculated using traditional insurance models. This means that the insurance rate may be high, the coverage may be loose, and the commercial feasibility is difficult to guarantee.

Moreover, in the event of an accident, the parties to be held accountable may include manufacturers, operators, platform providers, takeoff and landing point managers, maintenance units, air traffic control agencies, and urban managers... The liability is scattered and difficult to define. If insurance companies only underwrite part of the liability, it is difficult for them to bear the systematic compensation liability.

Although there are already the "Regulations" and operational safety rules, the institutional details such as the specific accident investigation mechanism, accident liability determination, compensation procedures, insurance claim settlement processes, public announcement mechanism, and compensation transparency mechanism are still immature. Insurance contracts, liability determination, compensation mechanisms, social assistance systems, and public trust mechanisms still need time to be established. It is not excluded that the situation of "events driving the formulation of rules" may occur.

Once insurance becomes the "entry threshold" for the low - altitude economy, small and medium - sized enterprises, those operating in remote areas, and players with low - cost operations may be marginalized, leaving only high - end players with strong capital, resource integration capabilities, and a willingness to bear high insurance premiums and compliance costs. The industry may no longer be diverse but become centralized and oligopolistic.

Therefore, at present, the significance of insurance to the low - altitude economy has not yet been included in the list of necessities; it is more like a bonus.

The second line of defense beyond insurance - trust

Insurance is not just a "money - paying tool"; it is also a public trust mechanism and a social contract.

Every low - altitude flight over the city is not only a technological test but also a public safety test.

Residents are concerned about noise, privacy, crashes, and interference; the media focuses on accident probability, liability division, government approval, and urban planning; the government is involved in airspace management, takeoff and landing point approval, public safety, and social stability.

When an insurance company underwrites, it is not only endorsing safety but also promising a system of trust. If they refuse to underwrite - society, the public, and capital will all receive a signal: "You can take off, but we don't guarantee you can land."

On the other hand, once insurance becomes the main form of public liability assumption, insurance companies transform from private companies into "system participants + urban governance collaborators". Insurance not only pays for accidents but also constructs a framework for liability assumption, public compensation mechanisms, and urban safety management after future accidents.

This requires insurance to not only undertake compensation but also complex tasks such as system design, risk assessment, public communication, accident tracing, and liability distribution.

Insurance transforms from a "financial product" into a "public infrastructure".

Ultimately, who is really willing to pay for the risks?

As the low - altitude economy is constantly portrayed as the next transportation revolution, the next industrial boom, and the next - generation urban infrastructure, people often see the new efficiency and value it brings to the city.

It provides services and reshapes space; it improves efficiency and gives rise to new lifestyles and business scenarios.

However, the lower, denser, and closer to residents the flights are, the more likely the risks such as noise, crashes, interference, and airspace conflicts are to affect real people.

The liability chain is lengthened, disputes are complex, and public perception sensitivity increases accordingly.

At this time, insurance, along with the law and supervision, becomes a heavy - weight force to maintain system stability. It is not about cleaning up after an accident but about providing a trustworthy safety foundation for the public, enterprises, capital, and the government. Because once the guarantee is lost, the so - called "future transportation" may come to an abrupt end after the first serious accident.

Without insurance, cities will not approve flight routes, the government will not open up airspace, and investors will hesitate. In the event of an accident, if the liability chain is unclear, the entire industry may be put on hold after a single crash.

Therefore, insurance is no longer an "accessory to be considered after takeoff" but a prerequisite for determining whether the low - altitude economy can truly take off, fly for a long time, and fly stably.

Whoever can establish this systematic, replicable, and sustainable risk - sharing mechanism earliest will be qualified to define the rules and control the rhythm in the future industrial landscape.

Is it capital and entrepreneurs? Is it insurance companies that are more familiar with risks? Or is it the government with public power and a regulatory perspective? The answer is not set in stone.