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LONDON (Reuters) - Additional rules may be needed to monitor growth in Big Data, or collection of high volumes of information, which could pose security, privacy and accountability risks, European Union regulators said on Monday.
Entire business sectors are being reshaped by building on data analytics and Big Data has the capability to transform the way products and services are provided, Gabriel Bernardino, chairman of the European Insurance and Occupational Pensions Authority, said.
Regulators worry that some customers will be classed as "undesirable" as firms are able to undertake more detailed analysis on them, EU banking, insurance and markets regulators said in a joint statement.
They launched a public consultation on the benefits and risks of Big Data for consumers and financial firms to see if more "regulatory or supervisory" actions may be needed.
"For example, consumers seeking household insurance for properties located in areas exposed to high risks such as floods, earthquakes or crime may have to pay very high premiums or might not be offered an insurance coverage," they said.
Firms could increase prices based on data showing that a customer was unlikely to switch services. There is also a need to ensure that firms have adequate protection against cyber attacks on the data they hold, the regulators said in the statement.
Data is pulled from mobile phones, the internet and other sources in a bid to get new insights on customer behaviour and predict future events more accurately.
The data is then used to tailor products to customers, such as by monitoring how they drive, or to inform investment decisions.
Big Data currently comes under broader EU rules on data protection, competition and consumer protection, but there are no rules written specifically for the sector.
There is no comprehensive information on how many banks, insurers and other financial firms use Big Data or on the market share of the key users and owners of Big Data technologies.
Financial firms are increasingly appointing "chief data officers" as cooperation agreements between financial firms and data providers proliferate, the regulators said.
"Big Data may lead to better and more informed decisions, more efficient processes and more appropriate services."
The three regulators said the availability of data is likely to exponentially increase in the future and they would publish during 2017 their decision regarding next steps.
Reporting by Huw Jones; Editing by Susan Fenton