AI Model DeepSeek Could Enhance Operational Efficiency for China’s Insurers : AM Best
Kathmandu – The adoption of the artificial intelligence (AI) model DeepSeek by insurance companies in mainland China has the potential to improve operational efficiencies, particularly for small to medium-sized carriers, according to a new commentary from AM Best. While the short-term credit impact on China’s insurance industry is viewed as neutral, the model could bring both opportunities and risks.
Several insurers in China have already implemented DeepSeek in their operations. The AI model could help smaller companies become more competitive by narrowing the technology gap with larger players, as well as provide access to advanced tools at a lower cost. These advantages may contribute to improved revenue growth, better data analytics, and enhanced customer experiences.
However, AM Best highlighted potential risks associated with the use of DeepSeek. Insurers that fail to establish proper risk management frameworks or identify the risks related to AI technology could face challenges in regulatory compliance, execution, and model risks. The success of adopting DeepSeek will largely depend on how well companies execute their innovation strategies and balance short- and long-term profitability.
Additionally, AM Best cautioned that significant investments in technology and talent without tangible results could negatively impact insurers’ operating performance. Insurers that allocate resources strategically, considering their operational scale and financial capacity, will be better positioned in terms of credit standing.
(AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry)