Blatter expected more warning from AXA
The French company, which is the main insurer of the tournament in Korea and Japan, has given notice to Fifa that it wants to renegotiate the £600m package.
But Fifa officials insist the World Cup finals are not under threat and will definitely go ahead.
Sepp Blatter, president of football's governing body Fifa, said: "We have been given one month to renegotiate the deal."
Fifa says it has already paid £7.2m of the £12m total insurance premiums due so far.
AXA, which sponsors the FA Cup, has insured the World Cup for various risks including "terrorism".
But it no longer appears prepared to carry the risk following the terror attacks on the United States and the subsequent military action in Afghanistan.
The company told Fifa the firm's contract to insure the World Cup would become invalid on 11 November unless the deal was renegotiated.
AXA spokesman Ingo Koch said: "The reason (for cancelling the contract) is that the dangers for security are mugh higher since the attacks on 11 September."
But Blatter appeared disappointed by the timing of the move.
"I would have expected a company such as AXA to have given us some warning about this, but there was absolutely none," said Blatter.
"It really boils down to a question of money and they clearly want a bigger premium.
Expensive event
"The deal will have to be renegotiated because the World Cup cannot go ahead without insurance which covers, for example, bank guarantees, marketing rights and also acts of terrorism.
"There is no question that this will stop the World Cup which will definitely go ahead.
"I have always said that a World Cup in the Far East would be extremely expensive, now it will be even more so."
The finals are scheduled to take place from 31 May to 30 June.
A report in Friday's Financial Times said AXA had radically changed its strategy following the September 11 attacks.
The report said the company would lay off staff, reduce the use of outside consultants and only invest in vital new projects.