The mention of “bails bonds” can conjure familiar images: red neon signs glowing near a county jail, or the leather vest, dark sunglasses and blond mane of reality show star Dog the Bounty Hunter.
Usually not a skyscraper or office building.
But insurance companies form the quiet backbone of the industry, underwriting the vast majority of the millions of bail bonds written each year while undergoing little public scrutiny.
Two senators want to shine some light on the business. On Friday, Sen. Cory Booker, D-N.J., and Sen. Sherrod Brown, D-Ohio, sent a letter to 22 insurance companies requesting details of their finances and their relationships with the bail bond agents they underwrite.
Booker and Brown are among critics who charge that the bail system unfairly jails poor people who cannot afford to purchase their pretrial freedom.
“Many of our nation’s insurance companies may be pursuing profits at the expense of economic security for vulnerable families and the goals of public safety,” the senators wrote.
Citing studies and articles of bail agents overcharging, bullying and otherwise behaving badly, they asked the insurers to detail how they police and punish bad behavior.
“I am particularly concerned that the insurance industry — which has received hundreds of millions of dollars in revenues related to bail bond insurance — is not doing all it can to ensure that the bond agents with whom they contract are complying with the law,” the letter states.
Critics of cash bail have succeeded at pushing some changes through the courts and legislatures. New Jersey essentially ended cash bail in 2017. A half-dozen states have limited cash bail through laws, constitutional amendment or rules of criminal procedure. Judges in California, Texas and elsewhere have struck down bail systems as fundamentally unfair.
The bail industry has fought the changes state by state and court by court. Bail agents make money by charging defendants a nonrefundable percentage, usually 10 percent, of the bond amount set by a judge or magistrate. In return, the agents promise to ensure the defendant shows up in court. If the defendant fails to appear, a judge can order the bail agent to pay the full bond amount to the court.
The insurance companies underwrite this risk by promising to pay the full bond amount if the bail agent can’t. For example, if a bail agent collected a $10,000 fee on a $100,000 bond and the defendant disappears, the insurance company is on the hook for any part of the $100,000 the bail agent can’t pay.
It’s unclear what the impact the letter will have. Both senators are in the Senate minority. Brown is the ranking minority member on the Senate Banking Committee and sits on the Finance Committee. Congress does not regulate the insurance or bail industries; states do.
The American Bail Coalition, the trade association and lobbying group for the bail insurance companies, made that point Monday in response to the senators’ letter.
“The letter evinces an complete lack of understanding of the industry and how it is regulated,” ABC executive director Jeffrey Clayton said in a statement. “Obtaining this information is the province of state Departments of Insurance, many of whom already collect this information, much of which is also a public record.”
But if companies answer the letter in full, the public could learn much about an opaque industry where data is spotty and of varying quality and quantity. Each state has different laws and different regulators monitoring bail agents and insurance companies. And while bail agents perform a public function, they are for-profit actors whose relations with their clients and underwriters are shrouded by private contracts.
Basic questions go unanswered, even the size of the industry. Booker’s letter referred to a $2 billion annual market in bail bond premiums. A.M. Best, a prominent insurance ratings agency, pegged that figure at $1.3 billion and dropping.
In a recent report, Best concluded that the reform movement has made a dent in industry finances.
After years of uninterrupted growth, bail bond premiums fell more than 3 percent in 2017 compared to the year before. The report forecast more decline as more laws change and lawsuits prevail.
“Ultimately, in states where reform measures significantly diminish — or eliminate entirely — the need for defendants to post cash bail, the business of bail bond agents and bail bond insurance specialists as currently constituted will likely cease to exist,” the report said.