House Bill 5994 would amend Michigan’s Insurance Code to change the rules governing insurance premium finance agreements. It lowers and caps delinquency charges in certain cases, limiting charges to no more than $5 for installment defaults of 10 days or more when the agreement finances a personal, family, or household insurance contract, or when the agreement is issued to a nonprofit organization with an annual premium of $10,000 or less. The bill also preserves the ability to assess a cancellation charge if a default leads to cancellation of the insurance contract, but ties that charge to the difference between the delinquency charge and $5.
The bill further authorizes premium finance companies to charge or pass through fees for payments made by credit card, debit card, electronic funds transfer, electronic check, or other electronic means, but only to recover actual processing costs. It requires advance notice of the fee, an opportunity to cancel without incurring it, and an alternative payment method by check, cash, or money order without the electronic-payment fee. The bill also bars such fees on debit or prepaid card transactions when prohibited by the card network’s rules or contract terms.
The bill would amend section 1510 of the Michigan Insurance Code, changing the permissible charges and fee practices for premium finance companies. It would directly affect insurers, premium finance companies, insured consumers, and qualifying nonprofit organizations by limiting delinquency charges in specified consumer and nonprofit transactions and by regulating electronic payment convenience fees. The bill’s definitions and restrictions would create new compliance requirements for fee disclosure, fee calculation, alternative payment options, and network-rule compliance.
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or partisan division in the available materials. Based on the bill text, the measure appears consumer-protective in its cap on delinquency charges while also accommodating premium finance companies by allowing recovery of actual electronic payment processing costs. Overall, the bill reads as a balancing measure rather than a highly controversial one, though it does impose operational limits on finance companies.
The main potential point of contention is the tradeoff between consumer protection and business flexibility. Consumer advocates would likely support the $5 cap on delinquency charges for personal, family, household, and certain nonprofit policies, while premium finance companies may object to reduced revenue from late fees and the administrative requirements tied to electronic payment charges. Another possible issue is the bill’s requirement that fees reflect only actual third-party costs, which could be difficult to calculate or verify and may be disputed by companies that process payments through affiliates.