MSO goes national

The Mutual Service Office, Inc. provides simplified forms and super service

By Bruce D. Hicks, CPCU, CLU

You're undoubtedly familiar with the Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS), but MSO, Inc. (The Mutual Service Office, Inc.) may be new to you. That's understandable, even though MSO is the oldest continuously operating multi-state rating bureau in the country. Since it was founded in 1944, MSO has primarily served mutual and stock insurers in its home state of New Jersey and other mid-Atlantic states. In 2011, MSO took a bold step and expanded its operations to all 48 contiguous states.

The bureau offers a wide array of forms and programs. In commercial lines, forms are available for property, liability, umbrella, businessowners, farmowners, inland marine, auto, garage, garagekeepers, and houses of worship. On the personal lines side, MSO has forms for homeowners, mobile homeowners, combination dwelling (property and liability), inland marine, and umbrella.

MSO is committed to creating forms that are logically structured and easy to read. Common language is used across forms, making it easier for the producer to modify a client's coverage without creating gaps and overlaps.

The forms rarely contain exceptions to exclusions, so users can clearly see what is and is not covered. For example, the description of incidental watercraft liability coverage under the homeowners form is laid out in a couple of straightforward, multi-point paragraphs.

MSO's use of simplified forms is helpful to agents, underwriters, claims handlers, customer service representatives, insureds, and claimants. Clearly stated coverage terms reduce claims and litigation expense and allow for more efficient policyholder service.

MSO is held in high regard by its members. John Danka, vice president of underwriting and marketing at long-time member Farmers Insurance Company of Flemington (New Jersey) has worked with MSO for 40 years throughout his career with several insurers.

In addition to MSO's ongoing refinement and expansion of its products and services, Danka notes that his company continues to work with MSO because of its "long-standing professional relationship with tenured staff that provides excellent service and leading-edge products."

Farmers uses MSO's standard products, he says, noting: "These can be easily modified to better serve any unique market segment or target product that we choose to focus on." MSO also has helped Farmers develop programs and endorsements for specific classes, Danka remarks.

"The MSO team is knowledgeable, easily accessible, and prompt in their response to our needs and questions," Danka says. "They also use their expertise and relationships with the New Jersey Department of Banking and Insurance to file any needed rate and form changes quickly and efficiently. CEO Jan Scites complements the MSO team with marketing and entrepreneurial expertise."

Echoing Danka's high praise for MSO is David McTernan, mid-Atlantic business unit leader for the Norfolk & Dedham Group.

In 2005, he explains, "We were making changes to our homeowners product and liked MSO's forms. They were easy to work with and had a good relationship with the New Jersey Insurance Department, so this made the filing process easy as we moved our homeowners program from ISO to MSO."

Building on success

After successfully serving insurers in the Northeast since 1944, MSO decided to expand into the remaining states. In 2006 a consultant evaluated MSO's business model and reported that the organization had strong growth potential because of the quality of its products and services and its expertise in working with small and mid-sized insurers.

MSO's chief executive officer, Jan Scites, JD, CLU, ChFC, explains: "Based on the findings of the report, in 2008 the MSO leadership team launched an aggressive expansion effort to enter all 48 contiguous states. We reached this goal a year ahead of schedule and have now begun to make program filings across the country."

As MSO expands nationwide, its members in the Northeast will continue to enjoy the same high-quality service and support they have come to rely on, says Trish Riggio, an MSO product development analyst and state compliance administrator.

"We are committed to providing the same level of service to our member companies as we expand. MSO prides itself on being totally accessible to our companies in every way, and nothing will change. As MSO expands, so will our staff, which will enable us to maintain the level of service our companies have come to expect," Riggio asserts.

A key challenge for MSO as it expands is to stay abreast of changes in state laws that may require alterations in forms and endorsements.

Jan Kozlowski, vice president of insurance programs and regulatory compliance services, acknowledges the importance of this task. He adds: "While monitoring state laws and regulations is a vital part of our research, we also draw on many other sources of information. At regularly scheduled meetings with our members, we discuss their underwriting, claims, and marketing needs and solicit their feedback on issues of concern. We also conduct market research to identify and evaluate emerging industry trends."

MSO also participates in state agent groups and industry trade associations, and finds their members to be an invaluable source of suggestions about additional products and services MSO should consider offering in its expanded market.

Vote of confidence

Over the decades of its existence, MSO has set a high standard for customer service and responsiveness to market needs. An executive with one of MSO's charter members is confident of the bureau's ability to expand its operations while maintaining its standard of excellence.

Bill Hirschfeld, vice president of underwriting for Franklin Mutual Insurance Group, says: "Over the years, MSO has grown from providing property rates and inspections to a full-service bureau providing rates, rules, and forms for both personal and commercial lines, as well as handling state filings and offering inspection and audit services."

Although MSO is now licensed to operate in all 48 contiguous states, Hirschfeld remarks, it remains committed to delivering personal service to each member. "The biggest advantage is their approachability. If you have a question, want to check out an idea, or create or customize a program, someone at MSO is always available to discuss it with you. They will guide you through the process from start to finish. The longevity of their employees allows them to get to know and understand their member companies."

As an example, Hirschfeld points to MSO's response to the challenging 2005 hurricane season, which included Hurricane Katrina. He was impressed with how well the bureau monitored the unanticipated exposure created by storm surges. MSO responded to members' concerns by adding storm surge to the flood exclusion in its property forms.

In addition, Hirschfeld notes, MSO assisted Franklin Mutual and other insurers in their dealing with reinsurers in the wake of the devastating 2005 hurricane season.

"Overall, the ease of working with MSO allows us to bring changes and new coverages quickly to our agents, keeping us up to date in a competitive market," says Hirschfeld.

Committed to agents

In addition to building strong relationships with insurers, MSO is committed to educating agents and brokers about its products and services, and the bureau is available to provide onsite training for companies and agents in their offices. MSO also makes presentations to agent associations and conducts seminars that qualify for continuing education credits.

Sue Quimby, CPCU, director of client relations and training and senior product development analyst, notes that MSO's training and support go well beyond formal programs. "One advantage of using MSO is our accessibility. We are available to answer questions via e-mail and phone about programs and rating. We help members test their computer rating and policy issuance systems. As we expand our operations, we will also expand our training opportunities to include webinars and on-demand programs."

MSO regularly reaches out to agents and seeks their input on coverage issues as well as their ideas for new forms. The bureau also interacts with agents through its commercial property inspection service. Agents and MSO inspectors share information about how best to approach property owners and the optimal times to make visits. After an inspection, agents may call inspectors to discuss their findings and ask questions about the characteristics of a property that may affect an insurer's underwriting decision or the premium rate the property owner will pay.

Partners in progress

MSO responds to a broad range of customer needs by forming partnerships and alliances with key industry sectors. For example, MSO supplies information to reinsurers that helps them tailor programs to meet the needs of their mutual insurance company clients.

Another strategic alliance is the Vendor Partner program, which MSO introduced in 2008 after analyzing the various operating units of a typical property/casualty insurer, from mailroom to boardroom. The purpose was to identify critical functions in which member insurers might benefit from the services of qualified third-party vendors.

Before accepting a vendor for the program, MSO looks into its background, reputation, credentials, and financial stability, Scites explains.

"We are looking for vendors that can help our member companies improve their bottom line," she says. "Currently we have 20 Vendor Partners that offer services like claims adjudication, strategic board reviews, IT system support, imaging and workflow systems, back office systems, green technologies review, and many others. The Vendor Partner program is a value-added service that is designed to help members improve operational efficiency and profitability." The vendors provide their services to MSO members at discounted rates.

For MSO, "going national" is an ambitious undertaking—and one that the organization and its long-time members are confident will allow MSO to expand its reach while remaining firmly committed to delivering top-notch products and services.

The author

Bruce D. Hicks, CPCU, CLU, is senior editor for Technical and Educational Products at The Rough Notes Company. He has more than 30 years of property/casualty insurance experience, including personal lines and small business underwriting as well as compliance duties for several national and regional insurers. Active in the Chartered Property Casualty Underwriters (CPCU) Society, Bruce served on the Board of Governors from 2007 through 2010.