Case Study: Surety for Bail Bond Agents
BAIL BONDSMAN CAPTURES PROFITS
A key role of the bail bond agent is to guarantee to the court (or sheriff's
department) that a defendant will show up in court at the appointed day and
time. If that doesn't happen and the bail bondsman can't bring the
defendant to court within a set time period, the bail bondsman is liable to the
court (or the sheriff) for the face amount of the bond. To make sure the
bail bondsman is able to make good on this promise, the court or sheriff may
require the bail bond agent to post collateral and/or be bonded by a surety
company.
Our bail bond agent client had been paying hundreds of thousands of dollars
to a third party surety company every year. The problem was that the
surety company really assumed very little risk, since any losses had to be
repaid by the bail bond agent. And the agent had to post collateral with
the surety company for financial security.
After a thorough review of regulatory requirements and constraints (after
all, who wants to run afoul of the criminal justice system?), we determined that
the bail bond agent could form its own surety company to capture substantial
underwriting profits. We licensed the surety company as an admitted
carrier to comply with state laws and set up streamlined processes to improve
the bail bond agent's interaction with its new surety. Our IT Services
division designed a new logo for the surety while creating software programs to
issue agent powers and track outstanding bonds. ORG manages the surety
company's day-to-day operations and finances, and is responsible for its
regulatory filings.
As a result, the bail bond agent's business is more profitable and more
streamlined. Now that's a good catch!
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