View from the Department of Financial Services on payment plans from bail bondsmen:
Compliance Topic of the Month: Failure to Collect Bail Bond Premium ~ Unlawful Rebating?
The Florida Statutes require bail bond agents to charge the exact surety bond premium amount filed by the surety company with the Florida Office of Insurance Regulation (OIR), nothing more and nothing less.
We are aware of bail bond agents and agencies who are not collecting the full premium, and in some cases, no premium. The bail bond agent must still pay the insurer and MGA their share of the premium. Not collecting the full premium costs the bail bond agent money to write and post the bail bond. This practice demonstrates more than questionable business skills, it is not permitted under the Florida Statutes.
If the bail bond agent is not making any attempt to collect the balance due, then he/she is discounting the premium filed with the OIR, or providing a rebate to the person who should have been paying the premium.
The surety company, or the professional bail bond agent, filed the rate they said would be the amount needed to provide the service guaranteed under the bail bond contract and allow them to make some profit and remain solvent. If the bail bond agent does not collect the full amount of the premium, then the net premium that was collected is going to be some percentage less than the premium filed with the Office. That amount is either the amount of the discount provided to the premium payer, or it is the amount of the rebate provided.
The premium rate filed with the OIR is $500 for a $5,000 bail bond. If the bail bond agent only collects $100, then the balance of $400 is the amount of the discount or rebate provided.
The reason some bail bond agents charge less than their competition for a bail bond is to try to get more business, which may appear to be good on the surface, but in reality it poses its own problems.
Bail bond agents who are not charging the full premium may be charged with violating s.648.33(2), F.S. This section requires the executing bail bond agent to charge the full premium for the bail bond being written.
Other violations that can be charged in this situation include s.648.44(1)(g), F.S., unlawful rebating, which states the bail bond agent may not “Pay a fee or rebate or give or promise anything of value to the principal or anyone in his or her behalf.”
Section 648.45(2)(i), F.S. allows the Department to seek suspension or revocation of a bail bond agent for rebating or offering to rebate, or unlawfully dividing or offering to divide, any commission, in the case of a limited surety agent, or premiums, in the case of a professional bail bond agent. If a bail bond agent does not collect the full premium, he/she is forgoing commissions earned in favor of the indemnitor.
A bail bond agent who is not collecting the full bail bond premium, can also be charged with violating s.626.9541(1)(h), F.S., which is part of the unfair trade practice statutes. This says the bail bond agent may not provide any unlawful rebate of premiums, may not pay a fee or rebate or give or promise anything of value to the principal or anyone in his or her behalf special favor or advantage or any valuable consideration to the person paying the premium as an inducement for that person to use that bail bond agent and not another.
Section 626.9541(1)(o)2., F.S., also part of the unfair trade practice statutes, applies as well. This law means the bail bond agent may not knowingly collect any sum that is less than the premium for that surety contract, or bail bond.
We strongly recommend that agencies keep extensive records of their efforts to collect the balance of the premium.