Cyber insurers are increasingly reluctant to cover customers
Cyber insurance is evolving fast, and not in a way that favors business-as-usual. Right now, insurers are rethinking how risk is assessed in digital environments. If a company works with a third-party managed service provider (MSP) that holds sensitive data or has administrative access to systems, insurers want to know that MSP is secure. No control? No coverage. That’s where things are headed.
MSPs have become central to how businesses run IT. They handle infrastructure, security, cloud operations, everything touching data. Because of this, they’ve also become primary targets for cybercriminals. Robin Ody, principal analyst at Canalys (now part of Omdia), called it out directly: “Partners have become the number one threat vector for customers.” Makes sense. If you’re attacking a network, it’s more efficient to breach the MSP rather than target companies one by one. That level of risk makes insurers uneasy, especially if the MSP hasn’t been through a verified cybersecurity audit.
Today, it’s not just about securing your own environment. You’ve got to evaluate the entire chain of who has access to your systems and data. Cyber insurers are starting to deny coverage to organizations that work with MSPs who haven’t earned trust through certifications or independent assessments. It’s not personal. It’s logical risk management.
For executives, this means reviewing not only in-house controls but also conducting due diligence on all MSP partners. If your insurance relies on a clean risk profile, and by default it does, then unvetted MSPs now represent significant exposure. The rules are tightening, and companies that ignore this trend are going to find themselves locked out of policy renewals or priced out with higher premiums.
Insurers are asking a simple question: can we quantify the cyber risk tied to this MSP? If the answer is no, they move on.
This isn’t just a compliance issue. It’s a strategic one. Choosing the wrong MSP could cost you coverage, or worse, leave you blind in a crisis. You want partnerships that make your business stronger, not more vulnerable. That’s the bar now.
A market divide is emerging
We’re watching a clear line form in the managed services landscape. On one side, there are MSPs that meet compliance milestones, cybersecurity certifications, regulatory audits, resilience frameworks. On the other, you’ve got those who fall short or move too slowly. That’s the split. And it’s going to reshape the market.
Compliance isn’t just about ticking boxes. Regulators, insurance providers, and enterprise customers are all pushing for proof, documentation, certifications, verified security practices. MSPs that can’t show this aren’t just losing credibility; they’re losing access to larger contracts, renewals, and partnership opportunities.
Robin Ody, an analyst from Canalys (now part of Omdia), made this point directly. MSPs that pass industry audits, achieving standards such as Dora certification or aligning with regulations like the UK Cyber Security and Resiliency Act, are positioned to take more market share. These are not optional steps anymore; they’re prerequisites for working with security-conscious clients, particularly in regulated industries like finance and healthcare.
For executives, CIOs, CTOs, CFOs, this signals a necessary shift in vendor expectations. Every third-party MSP you engage needs to be held to the same standards your internal teams are following. If you’re not asking for audit reports or proof of compliance, you’re taking on silent risk. That’s a risk that will be questioned by insurers, regulators, and shareholders when something eventually breaks.
You’re either partnered with a provider that supports your growth securely, or you’re aligned with one that limits it. The ones keeping up with legislation and certification requirements are gaining a serious competitive edge. Those that aren’t will fall further behind, especially as trust, in the security sense, continues to define how business is done in tech.
This is not a temporary phase. As legislation tightens and digital threats continue to evolve, the need for measurable compliance will only get more intense. Choose your partners accordingly.
The MSP sector continues to experience robust global growth
The managed services market is expanding, fast. Even with growing complexity in cybersecurity requirements and tighter scrutiny from insurers, worldwide demand for MSPs continues to rise. Businesses are doubling down on partnerships that deliver efficient, scalable IT operations. The numbers show it’s not slowing down.
Robin Ody, principal analyst at Canalys (now part of Omdia), projected global managed services growth at 12.6% at the beginning of the year. It’s since dipped only slightly to 12.3%. That’s still outperforming almost every other tech segment. Any time a sector pushes double-digit growth in this economic cycle, it’s worth paying attention.
The value proposition is clear. MSPs help clients scale digital infrastructure, secure operations, and improve delivery, without overextending internal teams. For most businesses across verticals, that translates directly into improved performance, reduced cost, and more predictable outcomes. Decision-makers see this. Which is why more of them are moving key functions to managed service environments supported by specialized partners.
Yes, risks related to cybersecurity and insurance are real, but they’re not slowing the market. Instead, they’re forcing adaptation. The MSPs gaining ground are those that embed security and compliance into everything they deliver. Growth is coming from evolved service strategies, not traditional models. Clients want results, but they also want predictable risk profiles. High-performing MSPs are solving both at once.
This is why growth continues. It’s not happening despite the challenges; it’s happening because the top players are solving them in ways that deliver operational clarity to their clients. For executives, the signal is clear: if your organization isn’t leveraging strong MSP partnerships, you’re paying more and getting less. This isn’t just about scaling resources, it’s about aligning with providers that excel where complexity rises.
Invest where the growth is. Secure the right partnerships. And do it with speed. The gap between early movers and laggards is widening.
Enhanced collaboration and integration into established marketplaces
The way MSPs close business is getting faster, and smarter. A major reason for this is better integration within digital marketplaces and increased collaboration across ecosystems. Partners are using platforms like AWS and Microsoft to simplify operations, make billing more efficient, and reduce the time it takes to move from proposal to signed deal. Friction is going down, and velocity is going up.
Robin Ody, principal analyst at Canalys (now part of Omdia), pointed this out clearly. He explained that when MSPs operate through cloud marketplaces, it eliminates old inefficiencies, like delays in procurement caused by lack of financial access or disconnected systems. These platforms give immediate pathways to end-customer finance teams and enable pre-validated workflows that speed up approvals. This isn’t just more convenient; it shortens the entire sales cycle.
When billing is handled directly through trusted marketplaces, small and mid-sized MSPs avoid upfront infrastructure costs and skip complex financial onboarding with each client. That efficiency frees up time and resources to focus on delivery, growth, and differentiated services. It’s a structural adjustment that directly impacts margins.
For executives, this has strategic implications. If your procurement teams are still navigating multi-step vendor reviews and custom contracting for each engagement, you’re not operating at full speed. Marketplace-aligned MSPs can deliver the same, or better, results, with faster implementation and better pricing transparency. That’s an operational advantage you can measure in revenue acceleration and reduced overhead.
What’s also happening is that more MSPs are now layering in partner alliances, creating multi-vendor solutions that can be deployed faster and more reliably through shared platforms. That collaboration accelerates innovation and ensures services are production-ready without needing ground-up builds.
The trend is simple: integrated, fast-moving MSPs are seizing market share. Those stuck in legacy procurement flows are not. The smart move is to align with partners who already understand the marketplace model and know how to move quickly. Time is capital, and the right partners don’t waste it.
Key executive takeaways
- Cyber insurance scrutiny is redefining MSP risk: Insurers are increasingly unwilling to cover clients who work with uncertified or unaudited MSPs. Leaders should ensure all MSP partners meet strict security and compliance standards to protect insurability and reduce exposure.
- Compliance is now a competitive filter for MSPs: A clear market divide is forming between MSPs that meet audit and certification requirements and those that don’t. Executives should align with providers that hold relevant approvals like Dora or UK cybersecurity certifications to future-proof partnerships.
- MSP sector growth remains strong despite regulatory friction: Despite mounting compliance pressures, demand for managed services continues to outperform the broader tech market. Leaders should continue investing in high-performing MSPs, especially those adapting quickly to security and insurance requirements.
- Marketplace integration accelerates financial and operational efficiency: MSPs operating within cloud marketplaces like AWS and Microsoft are closing deals faster and bypassing legacy procurement delays. Executives should prioritize MSPs with platform integration capabilities to drive speed, cost savings, and delivery agility.
