Managed IT providers are playing defense against cyber insurers that bundle security services into their policy offerings.
Insurance carrier Coalition in November 2025 acquired managed detection and response provider Wirespeed, underscoring a trend MSP insiders have long pointed to: insurers have emerged as competition. Coalition has expanded its offerings, adding penetration testing and security awareness training to ongoing MDR. There are other examples, from Acrisure, which has purchased multiple MSPs, to household names like Hartford and Travelers.
Insurance companies frame cyber services as a key part of the data they collect for configuring policies and reducing their own risk.
Coalition spelled out its “secret master plan” in an open letter last year. The company acknowledged it “would utilize the data that we had on cybersecurity and cyber-related risks globally to better understand a company’s cyber-related risks, which will enable us to provide them better insurance coverage at a better price than the competition, which would garnish success and revenue for Coalition,” the company’s CRO of Insurance Shawn Ram told Channel Dive. “We would then use that information and that revenue to develop security-related tools that we would then offer those customers at a cost.”
Proponents of the convergence say it’s a natural response to increased cybersecurity complexity, high claims rates by MSP customers and the ease of launching up IT services.
“It makes a lot of sense,” said Travis DeForge, director of cybersecurity at managed security services provider Abacus. “They're really not that terribly difficult businesses to spin out. A lot of times, it's reselling and just managing other software, and in a lot of cases, it provides a lot more direct, real-time feedback and data to the insurance broker, rather than that once-a-year questionnaire.”
The pivot has prompted a handful of MSP entrepreneurs to spin up insurance brokerages, promising to keep cyber policy and cyber services separate. Coalition and its peers are pushing against this separation of church and state.
“That is what the insurance industry has been preaching for years,” said Dustin Bolander, who founded Beltex in 2023. “That's the whole reason that MSPs are not allowed to be involved in the claim because it's the fox watching the henhouse. Carriers have hated MSPs, and now suddenly there's some money on the table.”
MSPs tell Channel Dive that their customers are fielding calls from insurance brokers pitching security services.
“Once they get their tentacles in that client, boom, they have account reps that'll reach out to them,” Techrug Founder and CEO Justin Reinmuth told Channel Dive. “They didn't invest millions and millions of dollars in standalone solutions or hiring directors of sales to not make this work. They just didn't.”
The encroachment often starts with security awareness training, which carriers may offer for free, and expands up the stack.
“[MSPs] always thought it was a scare tactic,” Reinmuth said.
Tensions mount
Insurance carriers frame their pivot as a natural extension of data-based policy-writing.
“They were getting more sophisticated with how they placed their bets in terms of cybersecurity breaches, they were understanding more about it, and then they realized, ‘Well, if we just had all this data in-house about what controls were in place, wow, we would have a great source of what's going on with, with how well certain companies are protected or not protected,’” said Jessica Davis, principal analyst at Channel Dive sister company Omdia.
Davis said insurance rates were also skyrocketing in the pandemic era, making bundled services attractive to end users.
“They started, for instance, working more closely with vendors and looking at the different controls that MSSPs or MSPs would have in place and saying, ‘If you meet these controls then we're going to give you a discount on your insurance.’”
Adding services reduces cyber attacks and the related insurance claims Coalition has to pay out, according to Ram.
“What company is more incentivized to prevent a claim than the company who would actually pay out if a claim occurred?” said Ram, who added that Coalition never uses data from security services to impair coverage or pricing.
Reinmuth sees another factor: the souring of relationships between MSPs and insurance carriers over the last five years.
“If you want to know the dirty truth, MSPs burned them in 2021, 2022 and 2023,” Reinmuth said.
“A large majority of carriers stopped writing MSPs in ‘22 and ‘23 because the loss ratios were horrible,” Reinmuth said. “They did not have the right infrastructure. So a lot of them pivoted to go after their clients and start controlling the security of the MSP.”
Not all firms in the fragmented MSP industry are highly compliant with cybersecurity, nor are most of them legally required to be. Compliant MSPs have customers that might not be. The easiest way to control the variables was to handle security in-house.
“[Insurance carriers said] said, ‘Hey, listen. You know what? To control our loss ratio, we want a co-managed solution,” Reinmuth said. “We're going to do everything where we get burned on claims, and we'll let you do the lower-level stuff.’”
Brokers evolve
Security services are a new play for independent brokers that sell Coalition and other carrier policies, and they’ll require acclimatization. Ram said cyber insurance itself was already an uncommon product.
“You might have anywhere from 5% to 20% of companies buying cyber insurance,” Ram said. “So, as a broker, you're first trying to get over the hurdle of understanding cyber-related risk and helping a client understand what could happen if you had a ransomware event or business email compromise or whatever it might be, and then secondly, how do you mitigate against those risks?”
Even if insurance agents don’t know cybersecurity, Bolander said their relationships with customers position them as a trusted independent advisor — something many MSPs yearn to be.
“Even if your insurance agent is completely incompetent, just by the nature of their job, they're usually a trusted advisor,” Bolander said. “As an MSP, you better be really good whenever that insurance agent comes in and says, 'I want to sell you Coalition.’”
Coalition is working to educate its broker partners and arm them with publicly available data in customer discovery.
“We give them information to help them help their client understand what cyber risk is, and then embedded in that we give them information about how Wirespeed could help, or just the concept of MDR, security awareness training,” Ram said.
It’s a learning curve that mirrors the technology services distributor channel, which evolved from brokering telecom services to brokering MSSP contracts. Coalitions’ current partnerships in the IT channel are with MSPs and value-added resellers, but he said the company would be very open to the technology services distributors.
“Coalition has had long-standing relationships with MSPs. We're constantly looking to expand those relationships,” Ram said.
The message for MSPs is clear: don’t be naive about insurance carriers’ intentions and be ready to battle on price. The competition will only escalate as concerns about AI governance prod deeper cyber investments.
“There's an opportunity here for MSPs to bake a lot of the continuous security services, like 24/7 monitoring, vulnerability scanning, maybe even AI pen testing, into their core MSP offerings so you can't really untangle them,” DeForge said. “Then they become a lot stickier and have a little bit more opportunity there. But it raises the perceived price, so you got us to really balance what your, what your ICP will allow.”
