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Privacy fears could fast-track EU data reforms

Sensitivity over data protection following the Ed Snowden revelations could spark a populist movement to push through "very unpopular" data regulations that may have a significant impact on the insurance industry.

A compromise text on the draft legislation, which would update the UK's 1995 Data Protection Act, was passed by the European Parliament's Civil Liberties, Justice and Home Affairs Committee on 21 October.

Under the proposed bill, companies could be fined up to $100mn or 5 percent of global turnover if they are found to be in breach of the more stringent legislation.

William Long, a partner at law firm Sidley Austin, said although the proposed reforms were unpopular there was a risk they could be pushed through parliament by a populist movement in the wake of Ed Snowden's revelations.

The former CIA worker and National Security Agency (NSA) contractor released thousands of documents showing the extent of US spying operations.

Long said: "We don't want it to be rushed; we want to make sure we get it right because we're going to have to live with this thing for the next 20 years."

But he said that some EU member states had pushed back against the reforms, despite pressure from the EU Commission.

Long said the proposals, which would impose more stringent rules on how information is treated when it is transferred beyond EU borders, would have a very significant effect on the industry.

"The insurance industry is one where large amounts of data are a critical necessity in terms of assessing risk."

The far-reaching proposals include a right of erasure that will give policyholders the option to request that their data is deleted once it is no longer needed by a firm. They could also withdraw consent for personal data to be used, unless that data is required by EU law or for scientific research.

This has sparked concern within the industry that the proposed legislation could interfere with risk management.

"I don't think it's going to go away because I think there is just so much interest and concern in this area and what's happened with the NSA that I'm sure feeds into that," Long said.

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