House Bill 5993 would amend Michigan’s Insurance Code to authorize insurance agencies and producers to charge insureds a fee for payments made by credit card, debit card, electronic funds transfer, electronic check, or other electronic payment methods, so long as the fee reflects the actual third-party cost of processing the payment. The bill also allows a producer to use an averaged fee across payment types instead of charging the exact cost for each individual transaction, as long as the amount does not exceed the average actual cost incurred.
The bill requires advance notice of the fee before the transaction is completed, gives the insured an opportunity to cancel without paying the fee, and requires that a no-fee payment option by check or money order remain available. It also makes clear that any such fee is nonrefundable, may be charged in addition to other lawful interest and fees, and may not be imposed on debit or prepaid card transactions if prohibited by the card network’s rules or contract. The bill defines “actual costs” as actual third-party processing costs, including costs incurred through an affiliated payment processor.
The bill would add a new section to the Insurance Code and revise section 1915 governing fees charged by insurance licensees. In practice, it would permit insurers, agencies, and producers to pass through electronic payment processing costs to consumers under specified limits and disclosure requirements, while preserving existing rules on surplus lines and personal lines policy fees. It would also clarify that these payment-processing fees are not part of policy premium for premium-tax purposes and must be separately disclosed and documented.
The available record does not include committee testimony or recorded votes, so there is no direct evidence of support or opposition from the legislative process in the materials provided. Based on the bill text alone, the measure appears to be a technical, industry-focused change that balances consumer disclosure protections with allowing insurers and producers to recover payment-processing expenses.
The main policy tension in the bill is between allowing insurance businesses to recoup electronic payment processing costs and protecting consumers from hidden or excessive charges. Potential points of contention include whether fees should be limited to actual costs versus averaged costs, whether the fee should be allowed on debit or prepaid card transactions, and whether the requirement to offer a no-fee check or money order option is sufficient consumer protection. Another possible issue is the treatment of affiliated payment processors as third parties, which could affect how costs are calculated and documented.