Bill to allow credit-card payment on insurance premium-finance loans fails after debate over fees

The Tennessee House voted down Senate Bill 766 on Friday after extended debate over fees and consumer protection. The bill would have updated law to permit electronic payment, including credit-card payments, for insurance premium-finance agreements and to allow collection or convenience fees tied to payment processing.

Sponsor Rep. Powers said the change was largely permissive and intended to modernize payment options for people who finance large insurance premiums: "It's just allowing a credit card to be used rather than check or cash," Powers said, noting convenience fees are intended to cover processing costs and would be limited to actual incurred costs.

Opponents expressed concern the proposal would layer additional charges on top of already expensive premium-finance arrangements. Representative McKenzie argued that the bill allowed convenience and application fees (including a cited 4% convenience fee and a $15 application charge) and that collection terms allowing attorney fees and a 15% charge on outstanding indebtedness could create a predatory stack of fees on struggling consumers. "This is another hole that's that you're never gonna get dug out of," McKenzie said.

The House moved to previous question, and the bill failed to receive a constitutional majority. The clerk recorded the vote as 48 ayes, 27 nays and 14 present not voting on final disposition; the presiding officer declared the bill failed to receive the required majority.

Sponsor Powers said the bill was permissive and would not increase interest rates, only allow alternative payment methods and pass processing costs to the third-party processor. Opponents remained unconvinced and framed the package of allowable fees and default charges as potentially harmful for low-income consumers.

Outcome: Senate Bill 766 failed to receive the constitutional majority and was referred back under the rules.

Implementation: Because the measure failed on the floor, no policy or regulatory change will take effect. Debate raised topics that consumer-protection advocates and insurers may revisit in future legislation.