The two Democratic lawmakers who have been pushing for reforms to California’s bail system are now looking for a peek behind the curtain at how the bail industry operates.

Assemblyman Rob Bonta (D-Oakland) and Sen. Bob Hertzberg  (D-Los Angeles) believe bail punishes people for being poor, and they want to fundamentally change how California decides whether to let people accused of crimes out of jail before their trial.

But with their bill on hold until next year, they’re now also looking to learn more about the insurance companies that back bail bond agents. The duo introduced legislation (SB 779) in the final hours of this year’s legislative session that would require more oversight of both bail agents and the surety companies that back them, and would ask the Department of Insurance to study the industry.

The lawmakers also announced they would hold a hearing this fall to examine the issue.

“We’ve been working very hard on bail reform … and what we’ve learned in that process is that these bail companies are just making an exorbitant profit,” Hertzberg said, adding that he and Bonta continue to work with Gov. Jerry Brown, Chief Justice Tani Cantil-Sakauye and others on broader reforms that would require counties to set up pretrial service agencies that give courts an alternative to cash bail.

But since the bail reform bill doesn’t eliminate money bail — voters would have to weigh in on that change — Hertzberg said it’s also worth probing the broader industry.

He said the more he’s learned about bail, the more questions he has — particularly about the insurance companies that back bail bond agents. Hertzberg said unlike other forms of insurance — where prices are based on risk and companies regularly experience large losses  — bail surety companies appear to experience little or no losses.

“We think one of the elements of the discussion is, are people being gouged? Is the government creating a monopoly that’s creating these crazy prices? Should you be charged where there’s no risk?”  he said.

When someone in California is arrested and charged with a crime, a judge often sets a bail amount they must pay in order to get out of jail. If the defendant doesn’t have the money, they can pay a fee to a bail bond agent, who essentially promises the court they’ll pay the full bail amount if the defendant skips out on court.

Those bail agents are backed by insurance companies that charge fees to agents for guaranteeing the bonds.

Jeff Clayton represents the insurance companies as a lobbyist for the American Bail Coalition. He said he’s baffled by the bill.

“We already do a lot of stuff that’s in this bill. We audit our agents regularly, at least annually. We are required to file a form with the Department of Insurance when we terminate somebody, and if there’s misconduct we have to tell the department. So I’m really kind of confused as to what they’re trying to do here,” he said.

Clayton said he believes the lawmakers fundamentally misunderstand the bail surety industry.

“You know, even though it’s considered an insurance product, it’s not an insurance product — it’s a financial guarantee is all it is,” he said, adding that it’s illogical to compare bail surety to auto insurance because individuals don’t purchase bail insurance.

“What we do is underwrite what the agents do, so when a bail goes bad we are ultimately on the hook for that,” Clayton said. “(They say) losses are never paid but there’s a reason for that — because we require the agents to put money in what’s called a buildup fund so they’ve actually already guaranteed to us they have substantial funds available to pay their losses.”

The legislation will be taken up in January when lawmakers return to Sacramento.

Lawmakers Pushing Bail Reform Want More Info on Bail Bond Insurers 25 September,2017Marisa Lagos

  • Bail Insights

    It is amazing that these elected officials are so clueless about the industry that they are trying to eliminate. Something as simple as the financial side of the business. Yes, the bail industry underwrites $15 Billion in risk each year. That is not revenue that is the amount of money that the companies are liable for if defendants don’t show up for court. The bill states that the insurance companies generate $1.5 billion in revenue from this $15 Billion in liability. That is actually incorrect. If these two representatives truly understood bail and how it works, they would know that they insurance company doesnt make 10% of the total liability. They actually make only 1% or $150 million on $15 billion in liability. So to say that the bail industry is a billion dollar global conglomerate of companies is completely false. It is time for Californians to know that truth about bail reform. It is time for the advocates of bail reform to stop spreading lies and misinformation on an industry that costs California taxpayers $0. It is time to stop putting the public at risk by promoting for the unsecured release of violent defendants into the public with no supervision and no accountability to show up for court. Just look at the results of bail reform in other states around the country. It isnt good. That being the case why are these two representatives still promoting it…that is the question we should ask to have answered. http://www.usbailreform.com

Author

Marisa Lagos

Marisa Lagos reports on state politics for KQED’s California Politics and Government Desk, which uses radio, television and online mediums to explore the latest news in California’s Capitol and dig deeper into political influence in the Golden State. Marisa also appears on a weekly podcast analyzing the week’s political news.

Before joining KQED, Marisa worked  at the San Francisco Examiner and Los Angeles Times, and, most recently, for nine years at the San Francisco Chronicle where she covered San Francisco City Hall and state politics, focusing on the California legislature, governor, budget and criminal justice. In 2011, she won a special award for extensive and excellent work in covering California justice issues from the National Council on Crime and Delinquency, and also helped lead the Chronicle’s award-winning breaking news coverage of the 2010 San Bruno Pacific Gas & Electric explosion. She has also been awarded a number of fellowships from the John Jay College of Criminal Justice at the City University of New York.

Marisa has a bachelor’s degree from the University of California at Santa Barbara. She and lives in San Francisco with her two sons and husband. Email: mlagos@kqed.org Twitter @mlagos Facebook facebook.com/marisalagosnews

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