Insurance: other; processing fees; allow premium finance companies to collect. Amends sec. 1510 of 1956 PA 218 (MCL 500.1510).
Summary
Senate Bill 944 would amend Michigan’s Insurance Code to change the rules governing charges in insurance premium finance agreements. The bill caps delinquency charges at $5 for certain smaller or consumer-oriented agreements: those financing insurance primarily for personal, family, or household purposes, and those issued to nonprofit organizations with annual premiums of $10,000 or less. It also preserves the ability to assess a cancellation charge if a default leads to cancellation of the insurance contract, but limits that charge to the difference between the delinquency charge already imposed 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, so long as the fee reflects actual processing costs. It requires advance notice of the fee, an opportunity to cancel without paying it, and an alternative payment method by check, cash, or money order without the electronic-payment fee. The bill also bars fees on debit or prepaid card transactions when prohibited by the card network’s rules or contract terms, and defines “actual costs” to include third-party processing costs, including those charged by an affiliated payment processor.
Impact
SB 944 would amend section 1510 of the Insurance Code of 1956 (MCL 500.1510) by limiting delinquency charges in certain premium finance agreements and by expressly permitting electronic payment processing fees under specified conditions. The bill would affect premium finance companies, insured consumers, and nonprofit policyholders by setting fee caps, disclosure requirements, and payment-option protections, while also clarifying that electronic payment fees may be added to other lawful interest and charges.
Sentiment
Based on the bill text and available context, the measure appears to be a technical consumer-finance and insurance-industry bill rather than a highly controversial policy proposal. The caption indicates support for allowing premium finance companies to collect processing fees, suggesting the bill is intended to clarify or modernize fee practices in line with electronic payment processing costs. No committee transcripts or recorded votes were provided, so there is no direct evidence of formal support or opposition in the available record.
Contention
The main points of potential contention are the new authority for premium finance companies to charge electronic payment fees and the limits placed on those fees. Consumer advocates could object to added charges on card or electronic payments, while industry interests may support the bill as a way to recover actual processing costs. Another possible issue is the special $5 cap on delinquency charges for personal, family, household, and certain nonprofit agreements, which balances consumer protection against lender flexibility. The bill also addresses whether affiliated payment processors count as third parties, a detail that may matter to companies with vertically integrated payment systems.