Predictions that cyber coverage could be the biggest growth opportunity for insurers are not coming to fruition, despite the enormous cost of digital crime, according to Deloitte.

It says global cyber premium has grown to only $US4 billion ($5.44 billion), with large expansion in the US market.

Previous predictions were that premium could hit $US20 billion ($27.2 billion) by the 2020s, Deloitte says in a market report. Even Munich Re’s modest prediction that cyber could hit $US8 billion ($10.88 billion) by 2020 may be difficult to achieve.

The number of clients with cyber coverage is stagnant, according to the US Council of Insurance Agents & Brokers, and policy limits average $US3.2 million ($4.35 million), a “proverbial drop in the bucket” if a major event occurs, Deloitte says.

Cyber crime costs $US600 billion ($819.45 billion) a year, it says.

Insurers are writing cyber risk with extreme caution as new threats and actors emerge. And policies are difficult to sell in the mass market because the risks are individual to each buyer.

Data-rich insurers are themselves prime targets, Deloitte says.

Meanwhile, insurers are likely to move more core services into the cloud as they transform their legacy systems, according to the report.

Information officers are under pressure to deliver digital capabilities and the cloud is a fast alternative. Insurers are already leveraging it for core operational activities.

Evolving technology such as advanced analytics and the Internet of Things (IoT) generally demands newer technology such as cloud computing that can be scaled quickly.

But in a repudiation of Lloyd’s optimistic outlook for IoT, Deloitte says telematics policies based on the technology will be a major challenge to implement and market.

Cost and complexity are hindering their development, and 25% of insurers in a survey by researcher Ovum say there is no consumer demand for such products; 20% say associated privacy compliance issues are too complex to develop policies.

Recent Lloyd’s research claims 125 billion devices will be connected to the internet by 2030, and the growth in data capture will bring better risk assessment, more flexible products and the mitigation of risks via sensors and monitoring.

Deloitte says insurance jobs are being deconstructed as these technologies develop.

Insurers are determining which work capabilities can be automated and what new skill sets will be required. Actuaries, underwriters and claims adjusters will be freed for high-level tasks and spend less time on computing and distillation, Deloitte says.