The cyber insurance market will triple in size to $7.5 billion in annual premiums by 2020 according to a new consultant’s report.
But PwC said insurance companies would not be laughing all the way to the bank as the insurance industry could face competition from disruptors such as Google.
Insurers and reinsurers are charging high prices for cyber cover and putting a ceiling on potential losses, deterring companies from buying cyber polices, in the report. Some insurers have kept out of the market, wary of the risks.
PwC’s Paul Delbridge said that 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.
Millennials – people in their 20s and 30s – are more likely to trust brands such as Google than conventional insurers and Google would be very creative.
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.
