The cyber insurance market will triple in size to $7.5 billion in annual premiums by 2020 and the insurance industry could face competition from disruptors such as Google if it does not act fast to develop products, a report said.
Insurers and reinsurers are charging high prices for cyber cover and putting a ceiling on potential losses, deterring companies from buying cyber polices, consultancy PwC said in the report.
Some insurers have kept out of the market, wary of the risks involved.
"If the industry takes too long, there is a risk that a disruptor could move in and corner the market by aggressively cutting prices or offering much more favourable terms," PwC said.
Millennials - people in their 20s and 30s - are more likely to trust brands such as Google or Apple than conventional insurers, Paul Delbridge, insurance partner at PwC, told Reuters.
"I can see Google being very creative," Delbridge said.
Technology companies may also be better equipped than insurers to price cyber risk, he added.
Most of the $2.5 billion written in cyber insurance last year was in the United States, where requirements to notify data breaches have focused attention on cyber protection.
But the European Union is expected to follow suit, contributing strongly to growth in cyber insurance, Delbridge said.
A separate report last week from German insurer Allianz said the cyber insurance market could grow to $20 billion by 2025.
“There is a general trend towards tougher data protection regimes, backed with the threat of significant fines in the event of a breach," said Nigel Pearson, responsible for cyber at Allianz Global Corporate & Specialty.
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