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Press Release

August 29, 2017

Contact: Richard Loconte, 212-709-1691

DEPARTMENT OF FINANCIAL SERVICES ISSUES GUIDANCE TO ADDRESS UNSCRUPULOUS ACTIVITY IN THE BAIL BOND INDUSTRY

Reminds Bail Agents That They Must Comply With New York Insurance Law Concerning the Return of Premiums and Compensation Paid for Bail Bonds, Confirmed in a Recent Court of Appeals Decision

Bail Agents or Insurers Do Not Earn a Premium for a Bail Bond when a Defendant Is Not Released from Custody After a Bail Sufficiency Hearing

Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) has issued guidance to all insurers authorized to write surety insurance in New York State and licensed bail agents that they must comply with the New York Insurance Law, as recently pronounced in a unanimous decision by the New York Court of Appeals, New York State’s highest court, in Gevorkyan v. Judelson.  The decision confirms the Department’s position that under New York Insurance Law, a bail insurer or bail agent shall not retain a premium paid for a bail bond when a defendant is not released from custody.  The DFS guidance reminds bail agents and insurers that they must promptly return to indemnitors all premiums and compensation paid for bail bonds for defendants who are not released from custody after a court does not accept the bail bond as the result of a bail sufficiency hearing.

“The New York Court of Appeals ruling and New York Insurance Law are clear: Bail agents and insurers must return premiums they have not earned when a defendant is not released from custody following a bail sufficiency hearing,” said Superintendent Vullo. “Bail agents and insurers have a responsibility to comply with the law and may not keep premiums from families when a defendant is not released from custody and does not subject the agent to risk of loss.  I am pleased that the Court of Appeals has spoken so firmly on this issue, and DFS will continue to take action to combat unscrupulous practices in the industry.”

In its July 27, 2017 unanimous decision, the Court of Appeals ruled that a bail agent or insurer does not earn a premium for a bail bond if a court declines to release the defendant from custody following a bail sufficiency hearing.  The decision relied in large part on the legal analysis provided in an amicus curiae brief by DFS, which licenses and oversees the bail bond industry in New York.  Under the Court’s decision, the insurer does not incur risk if the criminal defendant is not released and has no opportunity to abscond.  Such premium or compensation must be promptly returned to the persons who provided it as soon as possible after the criminal court’s determination in the bail sufficiency hearing.

A copy of the guidance is available here

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