Several insurers in China are integrating DeepSeek, an artificial intelligence technology, into their operations, with AM Best offering a cautiously optimistic outlook on its potential impact. While the ratings agency deems the technology’s effect on the industry as “credit neutral,” it acknowledges that it may bring short-term advantages, particularly for smaller insurers looking to enhance their competitiveness and reduce operational costs.
DeepSeek provides an affordable technological solution that could help insurers streamline operations, improve efficiency, and reduce expenses. However, AM Best has raised concerns over potential risks tied to AI adoption, such as data privacy issues and challenges in enterprise risk management (ERM).
The success of DeepSeek’s implementation will depend largely on how insurers execute their innovation strategies. While the technology has the potential to boost revenue, improve data analytics, and enhance customer experiences, it also carries regulatory, execution, and model-related risks. Insurers that fail to meet evolving AI and cybersecurity regulations may face penalties, and excessive investments in AI without clear returns could strain financial resources. Additionally, over-reliance on AI models without proper oversight could result in pricing and reserving errors.
Despite these risks, the rollout of DeepSeek aligns with the growing trend of AI adoption in China’s insurance sector. Insurers have been utilizing AI in claims processing, underwriting, and customer service since the early 2010s, with major players increasingly integrating it into pricing models and risk detection systems. For example, AI is being used to monitor vehicle conditions and issue alerts ahead of natural disasters.
Prominent Chinese insurers deploying DeepSeek or similar AI technologies include China United Property Insurance, New China Life Insurance, PICC Property and Casualty, Ping An Health Insurance, Ping An Life Insurance, Taiping General Insurance, Taiping Life Insurance, and ZhongAn Online P&C Insurance. These companies plan to apply the technology to a variety of functions, including underwriting, claims processing, fraud detection, marketing, customer service, back-office operations, compliance, and agent training.
The affordability and open-source nature of DeepSeek could help level the playing field for smaller insurers, offering them a competitive edge against larger firms. However, to realize its benefits, insurers must carefully allocate resources and strategically oversee the implementation of the technology to balance short-term costs with long-term gains.
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