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SB-898 Bail: surety insurers.(2017-2018)



Current Version: 05/01/18 - Amended Senate

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SB898:v97#DOCUMENT

Amended  IN  Senate  May 01, 2018
Amended  IN  Senate  March 21, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill
No. 898

Introduced by Senator Hertzberg
(Principal coauthor: Assembly Member Bonta)

January 12, 2018

An act to add Section 1820.5 to, and to add and repeal Section 1824 of, amend Section 1802.1 of, and to add Sections 1820.5 and 1824 to, the Insurance Code, relating to bail.


LEGISLATIVE COUNSEL'S DIGEST


SB 898, as amended, Hertzberg. Bail: surety insurers.
Existing law generally regulates the undertaking of bail and the licensing of bail agents, bail permittees, and bail solicitors. Existing law requires an insurer executing an undertaking of bail to do so through a person holding a bail license. Existing law authorizes the Insurance Commissioner to issue bail licenses and to regulate bail licensees. Existing law makes it a public offense to violate these provisions, or any rule of the commissioner made pursuant to these provisions, and makes a violation punishable by a fine not exceeding $10,000, or by imprisonment as specified, or by both that fine and imprisonment.
This bill would require each a surety insurer to report specified information, such as the number and total face value of bail bonds written in the state, to the Insurance Commissioner, the Judicial Council, and the Attorney General on a quarterly and annual basis. Beginning January 1, 2020, the bill would require a bail licensee to post the terms and conditions of its bail contracts online and to translate the terms and conditions of each bail contract into not fewer than 3 and not more than 5 of the most common non-English languages spoken in the county in which the contract is issued. By creating new crimes, the bill would impose a state-mandated local program. The bill would also require the Department of Insurance to conduct a study and make recommendations no later than July 1, 2019, regarding insurers who provide coverage to bail licensees, as specified. on its Internet Web site in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean. The bill, beginning January 1, 2020, would require a bail licensee to provide a bail contract and supporting documents at specified times in plain English, and translations in 5 specified languages upon request. The bill would require a translated document to state in both that language and English that the English version is the official version, and would subject an insurer that knowingly misrepresents information in another language to the penalties for unfair and deceptive acts or practices, effective January 1, 2020. The bill would also require a notice of appointment filed by a bail license applicant to include a copy of a contract between the applicant an a surety insurer, and would require the applicant to provide an updated agreement to the Insurance Commissioner if the contract is amended or superseded. By creating new crimes, the bill would impose a state-mandated local program. The bill would also make related legislative findings and declarations.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) The for-profit money bail system is a global anomaly, used only in the Philippines and the United States.
(b) Commercial money bail requires people to pay a nonrefundable deposits premium to private companies in order to secure release from jail, often leaving working Californians at risk of losing their jobs, their housing, and even their children.
(c) The commercial money bail system does not improve rates of appearance in court or enhance public safety. It has a coercive effect on people unable to make bail, who are more likely to plead guilty to crimes that they may not have committed in order to get out of jail.
(d) Fewer A report by Color of Change and the American Civil Liberties Union (ACLU) Campaign for Smart Justice states that fewer than 10 insurance companies are behind the vast majority of bail bonds being issued by bail bond agents in the United States. Bail States, and that insurers are increasingly part of larger global companies. They The report also explains that bail insurers collect hundreds of millions of dollars a year and face virtually no risk. By comparison, auto insurers in California average losses of 74 percent. Unlike auto insurance, the risk for bail insurers is completely disconnected from the losses they cover.
(e) For-profit According to that report, for-profit bail insurers are surety companies, but their profits are different than other types of surety insurance. In During the first three months of 2015, the top 100 general surety bond writers had direct losses averaging 13.2 percent. But surety insurers who cover bail bonds have The report notes that some bail companies’ losses that are minimal, are sometimes almost nonexistent, and according to industry sources are minimal and are often recouped.
(f) One The report cites one large bail insurer has executive who publicly boasted that it the insurer sustained no losses at all in 2014 or 2015. Another An executive for a smaller bail insurer has publicly stated that it has not paid on any losses for 17 years.
(g) In 2015, 63 percent of people in California jails were either awaiting trial or sentencing. In 2016, that climbed to 66 percent. As compared with the rest of the country, California has relied on pretrial detention at much higher rates than other states.
(h) California’s existing pretrial detention practices allow a person’s wealth, rather than the person’s likelihood of success on pretrial release, to determine whether the person will remain in jail before the person’s case is resolved.
(i) While unnecessary pretrial detention has been found to increase the likelihood that some defendants will commit new crimes, appropriate pretrial release can reduce recidivism.
SEC. 2.Section 1820.5 is added to the Insurance Code, to read:
1820.5.

Each bail licensee shall post the terms and conditions of its bail contracts online. Each bail licensee shall translate the terms and conditions of each bail contract issued into not fewer than three and not more than five of the most common non-English languages spoken in the county in which the contract is issued.

SEC. 3.Section 1824 is added to the Insurance Code, to read:
1824.

(a)The Department of Insurance shall conduct a study and, no later than July 1, 2019, make recommendations regarding insurers who provide coverage to bail licensees. Specifically, the report shall provide an analysis of both of the following:

(1)The relationship between risk to insurers and rates charged.

(2)A comparison of the risk and rates analyzed pursuant to paragraph (1) and the risk and rates of automobile insurers in California.

(b)(1)A report to be submitted pursuant to subdivision (a) shall be submitted in compliance with Section 9795 of the Government Code.

(2)Pursuant to Section 10231.5 of the Government Code, this section is repealed on January 1, 2023.

SEC. 2.

 Section 1802.1 of the Insurance Code is amended to read:

1802.1.
 Every (a) An applicant for a license to act as a bail agent shall file with the commissioner a notice of appointment executed by a surety insurer or its authorized representative authorizing that applicant to execute undertakings of bail and to solicit and negotiate those undertakings on its behalf. Additional notices of appointment may be filed by other surety insurers, upon the payment for each additional notice of the fees specified in subdivision (a) of Section 1811, before the license is issued and thereafter, as long as the license remains in force. Each appointment shall, by its terms, continue in force until any of the following occur:

(a)

(1) Termination of the bail agent’s license.

(b)

(2) The end of the license term, if the fee provided in subdivision (e) of Section 1811 for filing a renewal application is not paid.

(c)

(3) The filing of a notice of termination by the insurer, insurer or its representative, or by the bail agent.
(b) The notice of appointment filed with the commissioner pursuant to subdivision (a) shall include a copy of any contract agreed upon by the surety insurer and the applicant to execute undertakings of bail and to solicit and negotiate those undertakings of bail. If a contract between the surety insurer and the applicant is amended or superseded, the applicant shall provide a copy of the updated agreement to the commissioner. The contract shall be made available to a California court or person identified in subdivision (a) of Section 1269b of the Penal Code upon request.

SEC. 3.

 Section 1820.5 is added to the Insurance Code, to read:

1820.5.
 (a) A bail licensee shall post on its Internet Web site the terms and conditions of bail contracts or supporting documents utilized by the licensee. These terms and conditions shall be posted in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean.
(b) Before negotiating or executing a bail contract, a licensee shall provide an arrestee, or a person purporting to act on behalf of an arrestee, a written notice indicating the availability of bail contract documents translated into Spanish, Chinese, Tagalog, Vietnamese, and Korean. The notice text shall be in English and shall include the same text in Spanish, Chinese, Tagalog, Vietnamese, and Korean.
(c) During the negotiation of a bail contract, the bail licensee shall provide all of the following to an arrestee or a person purporting to act on behalf of an arrestee:
(1) The bail contract and supporting documents in plain, understandable English.
(2) Upon request, the bail contract and supporting documents translated into Spanish, Chinese, Tagalog, Vietnamese, or Korean.
(3) True and correct copies of the bail contract and supporting documents executed after negotiation.
(d) A bail contract shall disclose both of the following:
(1) The name of the insurer providing surety.
(2) A contact for the Department of Insurance for complaints.
(e) The English version of a bail contract or supporting documents shall be the official version. A document translated into a language other than English shall contain a disclosure statement in both that language and English stating that the English version is the official version and the translated version is for informational purposes only.
(f) An insurer that knowingly misrepresents information provided in a language other than English shall be subject to Article 6.5 (commencing with Section 790) of Chapter 1.
(g) This section shall become operative on January 1, 2020.

SEC. 4.

 Section 1824 is added to the Insurance Code, to read:

1824.
 (a) A surety insurer transacting bail in California shall report the following information regarding the insurer’s business operations during a calendar quarter to the commissioner, the Judicial Council, and the Attorney General within 30 days of the end of that calendar quarter:
(1) The number of bail bonds written in the state, itemized by county and bail agent.
(2) The total face value of the bail bonds written in the state, itemized by county and bail agent.
(3) The total gross premium collected by the surety insurer’s appointed bail agents, itemized by county and bail agent.
(4) The net premium remitted to the surety insurer, itemized by county and bail agent.
(5) The identification of all bail agents appointed by the surety insurer to conduct business in California, including name, license number, and locations, as well as the total number of bail agents appointed by the surety insurer in California.
(6) The identification of all of the surety insurer’s pending bail agent appointments, including name, license number, and locations, as well as the total number of the surety insurer’s pending bail agent appointments in California.
(7) A description of a disciplinary action, including, but not limited to, termination and restriction on activities, taken by the surety insurer against an appointed bail agent. The description shall include the identification of the agent subject to disciplinary action, the reason for the disciplinary action, and the terms and duration of the disciplinary action.
(8) A description of a notice of forfeiture letter relating to a California defendant received by the surety insurer. The description shall include the defendant’s name, court location, criminal case number, bond number, amount paid, and entity paying the forfeiture, itemized by county and bail agent.
(9) A description of a surrender or arrest pursuant to Section 1300 or 1301 of the Penal Code. The description shall include the defendant’s name, booking number, criminal case number, bond number, bail amount, court location, and all documentation related to the return of premium pursuant to Section 2090 of Title 10 of the California Code of Regulations.
(b) A surety insurer transacting bail in California shall annually submit the following documents to the commissioner, the Judicial Council, and the Attorney General:
(1) Current copies of any procedures used by the surety insurer relating to the screening, selection, and appointment process for licensed bail agents.
(2) Current copies of any standard bail agent producer or subproducer underwriting agreements used by the surety insurer.
(3) Current copies of bail agent producer policies, guidelines, procedures, rules, manuals, or similar documents used or issued by the surety insurer relating to any of the following:
(A) Bail underwriting rules.
(B) Company ethics and bail agent conduct.
(C) Forfeiture process.
(D) Financial reporting procedures.
(E) Rules and protocols regarding surrendering a defendant to jail.
(F) Credit bail process.
(G) Collateral retention.

SEC. 4.SEC. 5.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.