Insurance Industry Awaits Impact As Regulators Grapple With Data Privacy

Editor's Note: This is the first in an ongoing, occasional series on the impact of big data on the insurance industry.

Major insurance carriers sit on a treasure trove of big data, with endless possibilities to sharpen actuarial risk projections and target financial products more narrowly to millions of consumers.

But there are big risks, too. Regulators are trying to protect privacy and ward off hidden discrimination, all while allowing insurers to match financial products with those who need them for retirement. It is a needle in need of serious threading.

The expanding efforts toward data privacy regulation are seeing major developments on three main fronts:

• Legislators in five states passed data privacy laws, and nearly two dozen states are working on similar efforts. California sprinted out of the gate first with the "gold standard" in data privacy protections, as one law firm put it, but other states are taking a more business-friendly approach.