As insurance companies accelerate branch closures across China, a select group continues expanding their physical networks. On June 4, the Jiangxi bureau of the National Financial Regulatory Administration approved Ping An Health Insurance’s application to establish a Jiangxi branch, marking the fifth provincial-level branch approval for insurers this year according to Beijing Business Daily statistics.
Specialized Insurers Lead Expansion Charge
Against an industry-wide trend of downsizing to reduce costs, certain insurers are strategically growing their geographic presence. Alongside Ping An Health’s new Jiangxi branch, regulators have approved four other provincial branches in 2024 for China Fishery Mutual Insurance, PICC Health, PICC Pension, and King Dragon Life Insurance. Year-to-date, ten provincial branches have received regulatory green lights.
This expansion contrasts sharply with the broader industry’s retreat – over 1,000 insurance branches closed in the first five months of 2024. Analysis reveals the expanding cohort primarily includes newly established, well-capitalized firms like AIA Life and Rongtong Insurance, along with specialized providers such as pension and health insurers including National Pension Insurance and PICC Pension.
Lin Xianping, Secretary-General of the Cultural Creativity Research Institute at Zhejiang University City College, notes that establishing provincial branches requires substantial investment in facilities, staffing, and systems – a barrier for capital-constrained smaller insurers. Specialized insurers may face unique regulatory requirements; for instance, pension insurers must establish provincial branches before offering certain products across regions under new supervision rules.
Strategic Focus on High-Potential Markets
Recent expansions reveal clear geographic preferences, with insurers prioritizing financial hubs like Beijing, Shanghai, Guangdong, and Chongqing. In 2024 alone, Beijing Life, AIA Life, and National Pension Insurance all gained approval for Chongqing branches, while National Pension also secured Shanghai and Guangdong branches.
Wang Peng, associate researcher at the Beijing Academy of Social Sciences, attributes this pattern to these regions’ strong economic fundamentals, high consumer purchasing power, and deep talent pools. “These markets offer superior conditions for talent recruitment and partnership development with financial institutions,” added Lin Xianping, noting their residents’ greater insurance awareness and demand for quality service.
Industry observers suggest emerging markets like Sichuan and Yangtze River midstream cities may see increased insurer interest in coming years.
Slowing Expansion Reflects Digital Shift
The insurance industry’s branch expansion has slowed markedly, with just 10 provincial approvals in 2024 compared to 15 in 2023 and 36 in 2021. This reflects fundamental changes in distribution models as digital channels mature.
“The traditional equation where more branches equaled greater market power no longer holds,” explained Wang Peng. “Digital platforms now enable smaller insurers to compete without extensive physical networks.” An industry insider confirmed this shift, noting mid-sized insurers increasingly compete on product innovation rather than sales force scale.
Regulatory changes have also raised the bar for expansion. Since 2021 rules took effect, insurers need at least 200 million yuan in capital plus 20 million yuan per new provincial branch (waived above 500 million yuan), along with two years of operation before cross-province expansion. Regulators now carefully assess whether expansion plans align with companies’ strategic capacity and local market conditions.
Future Trends: Selective Growth Ahead
Looking forward, Lin Xianping anticipates bifurcated development: “Most insurers will grow more cautious about physical expansion, while specialized players in health and pension insurance may accelerate nationwide deployment supported by favorable demographics and policies.”
This evolving landscape suggests China’s insurance market is entering a new phase where digital capabilities and specialized offerings increasingly determine competitive advantage over geographic reach.
Related topics:
