Bail Agent Commission| Illegal Rebate

Several weeks ago I received an email from a friend bail agent regarding a bail agent commission advertisement sent out by a competitor in the industry. This email blast was directed to a group of criminal defense attorneys in Orange County, California and subsequently was sent  to my friend by a criminal attorney he works with for many years. The email heading reads, “Overall Bond Cost as Low as 6%” , and continues to list the conditions of  the applicable 6% bond cost and at a partial rebate of 7% bond cost. The author of the email blast, Chad Conley, proceeds to cite Prop 103, the law behind the so-called “low bond cost” via rebating. However, the bail agent commission or bail bonds is not a line of insurance in which a rebate is possible through Proposition 103! Professionals within the criminal justice system are very much aware of the standard 10% rate for a bail bonds service. In addition, surety insurers have obtained an 8% rate filing with the California Department of Insurance, but  requires certain criteria for the discounted rate. Some qualifications for the discounted rate are: attorney referred, union member, and government employee. Proposition 103 did effect the insurance industry in California, however it didn’t allow rebating in the commercial bail industry as indicated by Mr. Chad Conley.

Bail Agent Commission| Proposition 103

Proposition 103 was passed  by the  California voters on November 8, 1988. Prior to the passage of Proposition 103, the California Department of Insurance operated under the McBride-Grunsky Insurance Regulatory Act. Under this Act, insurance companies were not required to file rates for approval. Thus, its narrow margin win promised consumers a 20% rate “rollback” and required rate filings by the insurance companies. Insurance companies were now required to have their rates approved and displayed to all consumers. Bail bond agents and their respective bail bond companies are appointed to write bail through an insurance company. Thus, the insurance company has filed rates for the undertaking of bail with the California Department of Insurance. So, is it possible that a bail agent commission varies from bail company to bail company? This is highly unlikely, competition is fierce and I doubt any competitive surety insurer (including the California Department of Insurance) would lend an upper hand, if you will, to a competitor. Don’t forget, the CDI’s role is to protect the consumer, which includes fairness.

Bail Agent Commission| The Real Deal

Most individuals are not familiar with the administrative side of running a bail bond company and the internal costs of doing business. Lets examine some of these “behind the scene” requirements from a licensed bail agent of 16 years. The Bail agent’s “executed contract” with the insurance company requires to indemnify (protect) the insurance company from any loss or damages. Thus, the appointed bail agent has put up cash funds and/or real property to secure their appointment. In return the surety insurer gives you “paper” to write bail. Now, a commission(bond costs) is paid to the surety insurer for each bail bond written, typically 10% to 15% of the bail agent commission collected. This is a set percentage at the time the bail agent executes their contract. In addition, a required .5% to 1% of the total amount of bail is deposited in a build up fund (BUF) or reserve account for future payouts on bail bond forfeitures. The reserve account can accumulate funds for years if no forfeitures are paid and eventually  a great source for retirement .

As mentioned above, there are costs involved and outstanding liability the bail bond company must acquire in writing a bail bond. As my friend bail bondsman says, “We invest hard money, where as a criminal attorney invests time and resources.” We are “self insured” and take a substantial risk when writing bail. However, many criminal attorneys attempt to wheel and deal the bail agent commission. Did we forget we are two different entities? Maybe its due to the illegal rebating and discounting by scrupulous bail bondsmen that have these professionals believing our bail agent commission is negotiable. Another question you might want to ask yourself , why would a bail agent take a substantial cut in their bail agent commission if they have the same exposure of liability on a bond? It’s no longer “Bait-n-Switch, but rather “Bail-n-Switch” tactics many of these unethical bail agencies play to get the consumer in the door with an illegal rate. Once the defendant is released, the bail agent commission goes to 10%, not the 4% to 6% promised earlier, even threatening to surrender the defendant if they don’t pay up! Lets face it, if you want quality service, you will seek a reputable bail bond company to do business with. Otherwise, you are opening yourself up for disaster and hopefully it doesn’t turn back to bite you? The commercial bail industry is a commodity, with NO pricing power across the board for bail agent commission. Our fees are regulated and approved by the Insurance Commissioner who keeps tabs on all filed rates. Do us all a favor, next time you are solicited by a bail agent, get the real deal, and have them show you their filed rates with the California Department of Insurance.