Select statement is always fater than Insert statement.

This looks like optimizer issue.

Extract from Microsoft:

OPTIMIZE FOR ( @variable_name { UNKNOWN | = literal_constant } [ , ...n ] )

Instructs the query optimizer to use a particular value for a local variable when the query is compiled and optimized. The value is used only during query optimization, and not during query execution.

UNKNOWN

Specifies that the query optimizer use statistical data instead of the initial value to determine the value for a local variable during query optimization.

I am curious, instead of temp table if we create create physical table and try your query will improve the performance? Just both way give it a try 1. How you are doing and 2. what Igor has suggested.

i.e.

INSERT tbl1 SELECT x, y, z…

AND

create table tbl1(

ID int identity(1,1) prmiary key,

col1 data type c1,

col2 data type c2,

...

coln data type cn)

And let's see the difference.

HTH