State also said it had identified about 70 job opportunities for the 91 staff who would be affected by the closures.
It was not immediately clear whether other work would be available within the organisation for the three staff employed at its Dunedin branch.
No comment was available last night from the PSA, which represents some State staff.
The decision to close the bulk of the State branch network was in response to changing customer patterns, as fewer people visited branches, choosing instead to phone or connect via the internet, State said.
State executive general manager Craig Olsen said
the business would invest further in people and technology to develop online and phone services.
''Our customers' needs and their expectations of us are changing, and we need to change with them,'' he said.
Mr Olsen said it had been a tough decision to make but he believed strongly that it was the right move for the brand.
The other South Island branches to be closed are Nelson, Blenheim, Timaru and Invercargill.
State's Riccarton branch in Christchurch will remain open, as it had been identified that earthquake-related insurance claims justified a different approach.
State is part of insurance group IAG's direct insurance division, which includes AMI and employs about 1400 people.
AMI has 65 branches in New Zealand
and Mr Olsen said State customers had the option of using those for their transactions. IAG New Zealand head of corporate affairs Craig Dowling acknowledged some people would be unsettled by the changes, and every effort would be made to help customers, including older people, to make the transition.
Age Concern Otago executive officer Susan Davidson said the Dunedin State branch closure would clearly be ''unsettling'' for some older people, and they would find it ''a big change''.
Although many older people were, in fact, confidently using the internet, some others did not have computer equipment at home or the training to make insurance payments via internet.
And some people, including older people, preferred to talk to staff face to face about important matters such as insurance.
''I think it's a loss of something quite personal,'' she said.
Any loss of positive social contact with people outside an older person's family could ultimately reduce a sense of wellbeing among some people.
In this case, she could fully understand an insurance firm wanting to contain costs, and some further help would clearly be available face to face for some inquiring customers through AMI branches in Dunedin and Mosgiel.
