In recent years, the insurance industry in China has been continuously closing branches and clearing out insurance agents. From 2020 to 2024, more than 10,000 insurance company branches have exited the market, with nearly 2,000 leaving in 2024 alone. The number of insurance agents has also sharply decreased to 2.81 million in 2023, returning to the level a decade ago. Industry insiders point out that insufficient income and low revenue are the main reasons for the mass closures of branches and the loss of insurance agents.
According to a report by the “Securities Daily” on January 6, 2024, a total of 1,984 insurance company branches exited the market, while 585 new branches were established, resulting in a net decrease of 1,399 branches.
In fact, over the past five years, the trend of insurance company branches exiting the market has been ongoing, with a total of over 10,000 branches leaving. As reported by the “21st Century Economic Report,” from 2020 to 2024, the number of branches exiting the market were 971, 2,197, 3,019, 2,065, and 1,984 respectively. Although the number of branches exiting the market in 2023 and 2024 decreased, it still remains high.
Furthermore, the number of insurance intermediary institutions has also been consistently decreasing. According to the report by the “Daily Economic News,” from 2019 to 2023, the number of insurance professional intermediaries was 2,642, 2,640, 2,610, 2,582, and 2,566 respectively.
Regarding the massive closures of insurance company branches, Yang Fan, the general manager of Beijing Paipaiwang Insurance Agency Co., told the “21st Century Economic Report” that intensified market competition and increased cost pressure, especially the relatively high operating costs of grassroots branches of insurance companies, have led to these branches becoming the main target for “streamlining.”
Reported by the “Beijing Business Daily,” in the first three quarters of 2024, out of 84 property insurance companies, 48 companies experienced a decrease in investment returns compared to 2023, with some even showing negative performance.
From the perspective of the combined cost ratio, out of the 83 property insurance companies included in the statistics, 51 companies had a combined cost ratio exceeding 100%. This means that more than half of the property insurance companies incurred losses in underwriting operations.
The combined cost ratio = (combined claim expenditure + combined expenses) / premium income. A lower combined cost ratio indicates a stronger profitability for a property insurance company, and a ratio of 100% means income equals expenses.
The closure of branches inevitably leads to a significant reduction in the number of employees. The “2024 China Insurance Intermediary Market Ecology White Paper” released in November 2024 showed that the number of life insurance company agents dropped sharply to 2.81 million in 2023, a decrease of 6.31 million from the peak of 9.12 million people in 2019.
By the end of 2023, the number of insurance agents was almost on par with that of 2013 at 2.9 million, bringing the scale of insurance agents back to that of a decade ago.
During the release event of the “White Paper,” Zhu Lan, a Ph.D. supervisor at Peking University and associate professor of finance, stated, “If only active personnel are counted, the number might not even reach 1 million.” This means that over 8 million insurance agents have left the industry in the past four years.
On March 12, 2019, the former China Banking and Insurance Regulatory Commission issued a notice, progressively intensifying reforms in various segments of the insurance industry, particularly in terms of rectification and penalties.
Zhang Hui, who has a decade of experience in the industry, mentioned to “China Newsweek” that while tighter regulations are one reason for the exodus of insurance agents, “many more people are leaving due to very low incomes.”
An insurance agent named Li Ling, who chose to leave the industry less than six months after joining, shared on social media, “No five insurances and one fund, no basic salary without responsibility, not adapting to the company environment, the survival pressure is too great.”
She revealed her monthly income in the comments section, which was just over 1,300 yuan. Based on the IP location, Li Ling resides in Beijing, and this income level is not even enough to cover rent.