Core Viewpoint - The insurance industry is undergoing significant restructuring, with over 1,000 branch institutions being closed this year, averaging five closures per day, primarily in lower-tier cities [1][3][5]. Group 1: Institutional Closures - The National Financial Regulatory Administration approved the closure of 61 insurance branch institutions in one week, including 45 marketing service departments, 15 branch offices, and one telemarketing center [1][2]. - Major companies like Taikang Life and China Life have been particularly active, with Taikang Life closing over 200 branches this year, accounting for nearly 20% of total industry closures [2][3]. - The majority of closures are concentrated in third and fourth-tier cities, where market capacity is limited due to declining consumer spending [4][5]. Group 2: Impact on Business Models - Life insurance companies account for approximately 78% of the closed branches, while property insurance companies represent about 20% [5]. - Marketing service departments are the most affected, making up over half of the closures, followed by branch offices at around 30% [5]. - The shift towards online insurance purchasing is evident, with online purchase rates increasing from 73% in 2023 to 78% in 2024, while offline rates have decreased from 85% to 79% [5]. Group 3: Cost Management and Efficiency - The average annual operating cost for county-level marketing service departments exceeds one million yuan, leading to a serious "input-output imbalance" in lower-tier cities [6]. - Closing inefficient branches could reduce comprehensive cost ratios by 0.3 to 0.5 percentage points, as companies face pressure to optimize their operations amid regulatory constraints [6][7]. - The restructuring aims to lower operational costs, improve financial performance, and reallocate resources towards technology and service enhancements [7]. Group 4: Future Strategies - The insurance industry is transitioning from a product-driven approach to a value-service model, necessitating a more refined network of physical locations [9]. - Companies are expected to continue optimizing their branch networks, focusing on high-potential emerging markets and specific service-oriented locations [9][11]. - New branch models will incorporate value-added services such as health management and elder care, moving beyond traditional insurance sales and claims [11].

Core Viewpoint - The insurance industry is undergoing a significant transformation, with a notable trend of branch closures as companies seek to optimize costs and adapt to digitalization [2][5][9]. Summary by Sections Industry Overview - In 2023, 946 insurance branch offices have exited the market, with major companies like China Life and Taikang Life participating in this trend. Since 2020, over 10,000 branches have been closed nationwide, indicating a profound channel transformation in the industry [2][3]. Reasons for Branch Closures - Two primary reasons for the contraction of branch networks are identified: 1. Industry pressure leading to cost-cutting measures as growth slows [2][5]. 2. A shift in customer behavior towards online services, making traditional branches less efficient [2][5]. Closure Statistics - The number of closed branches has increased significantly over the past five years, with 2022 seeing 2,966 closures and 2023 seeing a slight decrease to 2,065. The trend is expected to continue into 2024, with approximately 2,012 closures anticipated [3][4]. Types of Closed Branches - The majority of closures involve marketing service departments and branch offices, particularly in third and fourth-tier cities. For instance, Taikang Life closed 178 branches, including 135 marketing service departments [4][5]. Impact of Digitalization - Digitalization is a key factor driving the reduction of physical branches, as online self-service options become the norm. This shift allows for centralized management and more efficient operations compared to traditional models [5][6][9]. Regulatory Environment - Regulatory bodies have been pushing for the consolidation of ineffective branches and the elimination of "shell" institutions, further accelerating the trend of branch closures [5][7]. Future Outlook - The trend of branch closures is expected to continue as the industry moves towards a more digital and efficient operational model. However, the need for physical branches remains for certain customer segments, particularly for high-value insurance products that require trust and personal interaction [9][10]. Consumer Behavior - A report indicates that online insurance purchasing rates are expected to rise, with 78% of consumers likely to buy insurance online by 2024, compared to 73% in 2023. This shift underscores the diminishing reliance on physical branches [9]. Balancing Act - While the reduction of branches can optimize resource allocation and enhance digital transformation, it may also weaken brand visibility and customer trust, particularly among less digitally savvy consumers [8][10]. Conclusion - The insurance industry is transitioning from a model reliant on extensive branch networks to one that emphasizes digital channels and operational efficiency, reflecting broader trends in consumer behavior and regulatory expectations [10].