Background Information
Midwest Insurance Co. is a major property/casualty underwriter based in St. Louis. It uses more than 3,000 independent insurance agents to market its products and collect premiums. In the past, agents typically have remitted the premiums to Midwest at a predetermined time each month by mailing the checks to a lockbox site or to a regional office of the insurance company. This method of cash collections has been slow, and accounting for the agents’ payments has been fraught with problems. Therefore, Midwest sought the help of Nationwide Bank (NB) in developing a more automated collection process. NB responded by developing an ACHbased “Customer-Initiated Payment Service (CIPS)” that allows the independent agents to pay Midwest with ACH debits initiated via a toll-free phone call or over the Internet. The next section describes how the CIPS process works; for simplicity, the description is limited to telephone-initiated payments.