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🏦 '''Automated clearing house (ACH)''' is an electronic funds-transfer network that insurance companies, [[Definition:Managing general agent (MGA) | MGAs]], and [[Definition:Insurance broker | brokers]] use to move money between bank accounts—collecting [[Definition:Premium | premiums]] from policyholders, disbursing [[Definition:Claim | claims]] payments, and settling inter-company balances without paper checks. In the United States the ACH network is governed by Nacha (formerly the National Automated Clearing House Association), while analogous systems exist in other markets: BACS in the United Kingdom, SEPA Credit Transfers across the eurozone, and various real-time payment rails in Asia-Pacific jurisdictions such as Japan's Zengin system and India's NEFT/IMPS infrastructure. For insurers, ACH is a cornerstone of [[Definition:Premium collection | premium collection]] operations, particularly for recurring personal-lines payments and high-volume commercial-lines transactions.

⚙️ When a policyholder authorizes ACH debits, the insurer's payment platform originates a batch file that passes through an ACH operator (the Federal Reserve or The Clearing House in the U.S., for example) and settles against the policyholder's bank. Standard ACH transactions typically settle in one to two business days, though same-day ACH options have become increasingly common. On the disbursement side, carriers route [[Definition:Loss payment | loss payments]], [[Definition:Commission | commission]] remittances to agents, and [[Definition:Reinsurance | reinsurance]] settlements through ACH credits, reducing the float and administrative overhead associated with check-based workflows. [[Definition:Insurtech | Insurtech]] platforms have further streamlined the process by embedding ACH authorization into digital quoting and [[Definition:Policy binding | binding]] flows, enabling instant enrollment with recurring payment.

💡 Reliable, low-cost payment infrastructure directly affects an insurer's [[Definition:Expense ratio | expense ratio]] and customer experience. ACH transactions cost a fraction of credit-card processing fees—an important consideration for carriers handling millions of recurring premium payments. Faster settlement also improves [[Definition:Cash flow | cash flow]] forecasting and reduces [[Definition:Accounts receivable | receivables]] aging, which in turn supports more accurate [[Definition:Reserve | reserve]] positioning. As embedded-insurance and digital-distribution models expand globally, the ability to integrate seamlessly with local electronic payment networks—whether ACH in the U.S., Direct Debit in the UK, or newer real-time schemes—has become a competitive differentiator for both legacy carriers and [[Definition:Insurtech | insurtech]] startups.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Premium collection]]
* [[Definition:Electronic funds transfer (EFT)]]
* [[Definition:Billing system]]
* [[Definition:Payment processing]]
* [[Definition:Policyholder]]
* [[Definition:Expense ratio]]
{{Div col end}}

Definition:Automated clearing house (ACH) - Revision history

PlumBot: Bot: Creating new article from JSON