The Bail Industry
How many individuals charged with a crime are sentenced to jail time or sent to prison who could not afford to pay their bail. The California bail bonds system and the insurance industry that advocates for bail bond agents seem to be a mystery to some Democratic lawmakers.
Reform discussions are led by Assemblyman Rob Bonta from Oakland and Senator Bob Hertzberg from Los Angeles. They believe that the bail system is not fair to the poor. The California lawmakers would like to see a law where the accused can be let out of jail before their trial without having to put up a lot of collateral.
Lawmakers Bonta and Hertzberg have submitted legislation requiring more oversight information on bail bond agents and the insurance or surety companies that insures them. Surety companies and bond agents have until the legislative session returns in January when lawmakers return to Sacramento. In the meantime, the Department of Insurance has been required to conduct the study on the bail bond industry.
The California lawmakers believe that the system needs to be reformed so that surety companies are not profiting at the expense of someone’s right to freedom without putting up their life’s savings. The legislation supported by the lawmakers further requires that counties should establish a pretrial service agency which allows courts to accept an alternative to monetary bail outs.
The key issues centers around the insurance or surety companies who under any other circumstance, would charge for prices based on a risk and loss scenario. However, in the bail bond industry, the insurance companies have neither.
For example, in the California bail bonds system, a judge sets a bail amount when someone is charged with a crime and is arrested; they are placed in jail or prison. To be released from incarceration, the accused must pay a bail amount, but if they don’t have the money they seek a bail bond agent who has an upfront fee arrangement.
The agent promises the court that they will pay the bail amount if the accused goes AWOL. Now, here is the quandary for the lawmakers – the bail bond agents are backed by an insurance company that charges fees to the agents to guarantee that bail bond.
In their defense, the Bail Coalition, represented by lobbyist Jeff Clayton said they did not understand why lawmakers are concerned. The Coalition believes that the lawmakers do not fully understand the bail surety industry because the Coalition said that the concerns raised by the lawmakers already exist.
Mr. Clayton explained that bail bond insurance is not an insurance product as it is in many other deals. Bail bond fees and their financial responsibilities to the bail bond agent is a financial guarantee, not something that is purchased like an auto insurance policy.
The Coalition states that they underwrite the services performed by the agents. The Coalition further explained that the losses are covered because bail bond agents are required to set up a “build-up fund” so that if an accused skips bail, their money is already provided in the fund account.