DEEPSEEK AI MODEL SEEN AS CREDIT NEUTRAL FOR CHINA’S INSURANCE SECTOR - AM BEST 

KUALA LUMPUR, March 24 (Bernama) -- The adoption of the artificial intelligence (AI) model DeepSeek among mainland China’s insurance companies could help small to medium-sized insurers enhance their operational efficiency, according to global credit rating agency AM Best.

AM Best's recent commentary indicates that the short-term impact of DeepSeek on China's insurance industry is credit neutral. Several insurers in China have begun integrating DeepSeek into their operations.

In its commentary, “DeepSeek Could Improve Operating Efficiency of Mainland China Insurers, Albeit with Risks”, the credit rating agency highlighted both the potential benefits and risks of AI technology, suggesting that while DeepSeek could improve operational capabilities, its overall impact remains neutral from a credit perspective.

AM Best senior financial analyst, Lucie Huang noted that DeepSeek could help China’s smaller insurers become more competitive and narrow the technology gap with larger players.

She added that the AI model could also support revenue growth, improve data analytics, and enhance customer experience.

“Outcomes will largely depend on insurers’ ability to allocate resources strategically and in proportion to their operational scale and financial capacity,” said Huang in a statement.

However, AM Best also warns that DeepSeek’s use may negatively affect insurers’ enterprise risk management if risks associated with AI models are not properly identified or mitigated.

Insurers failing to establish adequate risk frameworks could face negative implications for their business, particularly in areas such as regulatory risk, execution risk, and model risk.

Additionally, the impact on insurers' operating performance could vary. The commentary further noted that while DeepSeek has the potential to improve operational performance, high investment in systems, talent, and processes without tangible results could dampen performance.

-- BERNAMA