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MSO sets growth as agents, insurers seek marketing advantages.


MSO[R] Inc. (The Mutual Service Office, Inc.), the not-for-profit property and casualty insurance rating bureau, has been providing solid service to companies and agents for more than 65 years. Incorporated in 1944 by a group of New Jersey mutual insurers, today MSO serves both mutual and stock companies as well as their agents in the northeastern and mid-Atlantic states as the oldest continuously operating multi-state bureau in the country,

As agents and insureds seek competitive advantages and as probity, accountability and transparency take center stage in every financial transaction, the MSO's activity has assumed new importance, yet it remains essentially the same: to provide small to mid-sized insurers and their agents with an easier, more profitable way to underwrite risks.

MSO offers a complete line of Commercial and Personal Lines programs, including Businessowners, Commercial Auto, Commercial Property and Liability, House of Worship, Special Contractors, Garage, Garagekeepers, Commercial and Personal Inland Marine, Homeowners/Mobilehomeowners, Dwelling Property and Liability, and Commercial and Personal Umbrellas. In addition to the standard programs, MSO offers specialty BOPs for risks including Bed and Breakfasts, Condo Associations and Landlords. A Named Perils version is also available, which allows agents to offer BOP policies to risks that would not normally qualify.

MSO was the first rating bureau to offer a standard umbrella program in the industry, for both commercial and personal lines, introduced in 1993. In addition, the Personal Umbrella program includes an option for Farm Umbrella.

Each program includes all policy forms, endorsements and rating manuals. All MSO forms are designed to ensure that coverages are essentially equivalent to the standard industry forms, but are in a truly "easy read" style that has become the trademark of MSO forms drafting. MSO programs are comprehensive, yet easy to use and readily programmable. This style simplifies the policy language in a way that insureds can clearly understand when discussing with their agent.

Plain language policies reduce confusion, which in turn reduces ambiguity and often avoids payments for losses that were never intended to be covered. Additionally, there is great consistency of coverage and exclusion wording between programs. This makes it easier for the claims personnel and adjusters who work with them.

As an example, in MSO programs exclusions are "pure" exclusions. Historically, insurance forms included lengthy exclusions explaining what is not covered and within those exclusions are multiple exceptions. MSO avoids the use of exceptions to exclusions, since those exceptions to exclusions are actually coverages. The Supplemental Coverages section clearly lists the coverages that would be hidden as exceptions to exclusions in other industry programs. The MSO "pure" exclusions reduce confusion in claims handling because it is clearer to both the agent and their insured regarding what is and is not covered in the policy.

MSO clearly lists dollar limits in the Declarations Supplement. Rather than having to search for these limits that are typically buried in a large policy form that can sometimes run over 30 pages, MSO utilizes the two to three page Declarations Supplement, such as the BOP Declarations Supplement, which makes the limits extremely easy to find. This benefit has led to agents using the MSO Declarations Supplements as a marketing tool when meeting with their prospective clients. Companies can also easily customize these limits, as any changes can be easily made to the simpler Declarations Supplement rather than having to change the entire policy form.

MSO manages to stay innovative and well ahead of the market while also offering program stability which is of importance to companies and agents. This was emphasized by Peter Thornton, CIC of the Thornton Agency in Parsippany, NJ, "They're less inclined to change / tweak/modify things as frequently as most of the big boys, so it's easier to know how and what to do over longer periods of time. Less learning for me!" By minimizing main policy form changes, MSO helps companies avoid costly programming efforts and reduces additional training needed for employees and agents. Yet MSO addresses all emerging issues in the marketplace by modifying the state mandatory endorsements or introducing optional coverage endorsements.

Commercial Property and Commercial Liability programs use an "all lines" classification system. The first digit of the four digit class code identifies the liability class within the "parent" property classification. This greatly simplifies policy rating. Broad business categories are broken into thirteen groups. Classifications are listed alphabetically in each group, making it easy to find the applicable classification. It also enables you to see the other descriptions within the type of business categories. The special coverage and rating procedures applicable to some liability classes (e.g. swimming pools) are grouped in the Commercial Liability rules pages, rather than cluttering the classification pages with notes.

The MSO Businessowners Program, introduced in 1982, is one of the most comprehensive and competitive on the market. The MSO BOP was the first in the industry to combine property and liability coverages in one easy to use form. Broad coverage options and a wide range of eligibility classes give companies and agents a real edge. From apartments to video stores, a wide range of offices, mercantile and service businesses qualify for the BOP. Eligibility requirements can be customized to meet a company's specific marketing and underwriting needs.



The simplified MSO Personal Lines program integrates Homeowners, Mobilehomeowners, and Combination Dwelling in a unique program that provides maximum flexibility. One main Common Provisions Form is used for all lines and 90% of the rules, rating, and endorsement procedures are the same for each product. This means that underwriters and agents need only learn one set of rules and forms. The similarities also simplify procedures and help companies avoid conflicts when adding certain coverages to a Homeowners policy, such as Combination dwelling.

Personal Umbrella and Inland Marine coverages are both available as an endorsement to the policy or as a stand alone policy. The advantage of using as an endorsement to the policy is that there is one less policy for the agent to keep track of. Additionally the insured has only one policy and one bill which leads to less confusion. The distinctive Combination Dwelling program gives agents the ability to write Homeowners type of coverage on risks that might not otherwise be eligible for a Homeowners policy. This is ideal for desirable risks that might not be eligible for a regular Homeowners policy, as the same coverages are available.

"When we entered the specialty market for coastal dwellings, there was no question as to which insurance forms and rating organization we would use. MSO was our first and only choice. We have enjoyed working with them since 2003. They offer industry and MSO specific training and workshops that we and our staff find extremely helpful," affirms Andy Anderson, Anderson Insurance Agency of Manahawkin, New Jersey.

MSO is receptive to input from agents and companies who have suggestions for improvements to programs. Customer feedback allows MSO to keep products and services up to date and effective. Whether it's an update to an existing product or service, or introducing a new one, MSO consults their clients at every stage of development to ensure that products and services reflect current market trends as well as the industry's changing regulatory and legislative environment.

MSO works with specialty coverage providers to develop custom forms that are compatible with MSO policy wording, thereby reducing the effort needed to provide these coverages, and reducing potential language conflicts. For example, coverages such as equipment breakdown and employment practices liability can be added to existing policies at a lower cost to the insured than a separate policy would require. Consolidating coverages in one policy makes the agent's job easier as well. MSO also reviews policy wording with reinsurers to ensure compliance with their requirements.

This kind of personalized service allows companies to underwrite business easily and profitably. Merely a phone call or email away, agents and companies have direct access to MSO's industry experts and key decision makers. Peter Thornton agrees, "I find some of the pluses to MSO companies to be that they are generally smaller so more personable and easier to navigate. The personal relationships are better founded, so discussion and argument is easier since I know with whom I am speaking."

Hands-on personalized service is a major component of MSO'S business philosophy. "Their size and organizational structure make MSO most accessible for conversations regarding coverage forms and coverage questions. They are willing to offer advice, counsel and guidance when questions arise on rating and coverage issues" states Andy Anderson. The skilled support staff will give expert guidance in modifying MSO rules and forms and assistance with insurance department filings. Product development and filing support for MSO programs are provided at no additional charge for subscribing companies. MSO also offers product development and filing support for non-MSO programs (both independent and other bureaus) at a substantial savings over what is charged by other providers.

With more and more states mandating that filings be made through the NAIC's System for Electronic Rating and Form Filing (SERFF), smaller companies may find themselves unable to comply. As a licensed third-party SERFF filer, MSO can submit all property and casualty filings on behalf of any insurer which can save precious time and money.


In addition to providing aid for product development, MSO offers on-site training and refresher courses for all MSO products for both companies and their agents. In March of this year, the Professional Insurance Agents of NJ (PIANJ) invited MSO to present a continuing education program at PIA's "March Madness" event. The seminar, entitled "Understanding MSO Personal Lines", offered an overview of the MSO programs, including a discussion of the differences between MSO and other industry programs.

An extra added benefit to MSO is that they act as the statistical agent for all member companies. Summary data reports are filed with the insurance departments by MSO to lessen that burden. The MSO All Lines Statistical Plan requires the same simplified coding by line for all companies, no matter their size. The same straightforward layout is used for each line of business and is designed to only collect data that is vitally important. For those companies who work with additional rating bureaus, MSO can convert that coding to MSO for easy collection.

Another key element that allows insurers and their agents a more profitable way to underwrite risks is schedule rating. Developed on the basis that no two risks are the same, MSO has the ability to provide specific rates on all commercial buildings and their business personal property, regardless of their size. Rates generated for the risk during the schedule rating process are effective for seven years. All companies have access to rating information for a property regardless of whether the risk is currently in their book of business. This can be extremely helpful to a company when trying to decide how they can write the risk or if the risk meets the company's underwriting criteria.

Detailed property inspections provide companies subscribed to this service with a personalized field survey report with rates that reflect the unique circumstances surrounding each risk. In addition to this survey report, companies and their agents receive copies of the recommendations and the schedule rating worksheets which shows the existing rate for the property as well as a lower idealized rate. In addition to the schedule rate, MSO develops an idealized rate that would apply if all correctable hazards were eliminated. This gives companies and agents a great way to show policyholders how much they can save by making their workplaces safer. Recommendations are based on nationally recognized standards as well as general building codes. The complete list of recommendations outlines what the policy-holder needs to do in order to qualify for the lower rate. For those insureds that may not want or are not able to address all recommendations, MSO can develop tentative rates for the company and the agent that show what the rate will be if some of the recommendations are complied with.

These reports can help a company write business more profitably by providing rates that reflect individual circumstances and they also help the company improve its book of business by encouraging insurers to improve their risks. Agents are able to take on the value added role of risk manager with smaller commercial accounts. They'll be able to tell them the easy steps that the client can take to qualify for a lower rate down the road.


The field inspectors utilized by MSO have many years of experience and are considered experts on such topics as sprinkler systems and commercial cooking. MSO's senior field inspector has served on National Fire Protection Association (NFPA) committees for well over 20 years. The field inspectors as well as the rest of the MSO rating staff are available to speak directly with any company or agent to discuss questions regarding the field survey report.

Aside from the customary products and services provided by a rating service bureau, MSO has also created partnerships to offer specialized services to our companies and others in the industry. MSO has teamed up with InsurCard to offer companies an alternative means of handling claims payments. Instead of claims checks, company adjusters provide stored value cards that can be used just like a regular debit card at ATMs, banks and retail merchants. Advantages of the system for insurers include reduced claims processing costs (no paper checks to handle), enhanced fraud protection, and improved cash flow and record keeping. Funds for subsequent payments can be added electronically to a claimant's card which negates any waiting periods that normally occur with check issuance. Some benefits to the insured are immediate receipt of their funds, ability to use the card for shopping and paying bills, as well as 24/7 customer service by phone or on the web. These benefits lead to improved relations between the agent and the insured.

In collaboration with CDS Business Mapping LLC (CDS), MSO offers access to RiskMeter Online. RiskMeter Online is a browser based application that performs geographical lookups to determine what perils a property is exposed to, such as earthquake, tornado and flood exposure. As this is an internet application, using the service is quick and accurate. Unlike conventional paper-based methods and multiple internet lookups, RiskMeter Online provides the user with accurate and efficient exposure information up to 90% faster than existing methodologies.

MSO was created by and for small to mid-sized insurers. As a result, while not the largest rating and statistical bureau, they are the most flexible and responsive to the customers they serve. MSO realizes and respects that each insurance company has its own style and corporate philosophy. By recognizing this distinctiveness, MSO can offer services geared to a company's individualized needs.
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Title Annotation:COVER
Author:Shea, Art
Publication:Insurance Advocate
Article Type:Cover story
Date:Aug 17, 2009
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