Bail system decried in ACLU report, but big insurers behind it

Civil rights groups have argued for years that the bail system unfairly targets the poor, and in a report issued Thursday, the American Civil Liberties Union says it's simultaneously enriching a massive underwriting industry that assumes little risk.

The report, called " Selling Off Our Freedom ," comes as Los Angeles County – by far the biggest local court system in California – has embarked on a comprehensive review of its bail system. Across the country, court systems are rethinking money bail.

When someone is charged with a crime and a judge sets bail, the individual must turn to a bail bondsman if his family is unable to come up with the money. In California, the average bail for a felony is $50,000.

The bondsman asks for 10 percent of the bail amount and posts a bond with the court for the full amount.

And whether the suspect is found guilty, not guilty, or has the charges dropped, the 10 percent of bail is not returned. And much of that money, according to the ACLU report, goes to the big underwriters. 

They’re not household names: The two largest are Japan-based Tokio Marine and Toronto-based Fairfax Financial, it says, adding that nine insurers underwrite "the vast majority" of the $14 billion in bail bonds issued in the U.S. each year.

The ACLU report, produced in conjunction with Color of Change, says insurers assume little liability while offloading most of the risk to bond agents.

As an example, a 2013 contract between Bankers Surety and a bail bond agency required the agency to take "all liability for any undertaking of bail," including requiring full payment of all forfeitures, losses, costs, or expenses to the insurer, with interest, the report says. In the event that all of those protections don’t work, insurers have as backup the Build-Up Fund, paid into by the bail agent with a percentage of each bond.

Courts didn't always impose high bail amounts. Just over two decades ago, most people arrested for felonies were released without having to pay bail. The report says bail bondsmen and the insurance industry behind them successfully lobbied for laws requiring bail when crime rates were high and lawmakers were susceptible to the argument.

That could change in L.A. County; a bail system evaluation by the courts, the L.A. County District Attorney, the L.A. County Sheriff, the public defender's office and others is due back to the board of supervisors this summer.

The bail bonds industry says it provides an important service to people who otherwise would be stuck in jail. 

The state legislature is also considering a bill that would ensure that those who are not a threat to public safety or at risk of fleeing are not held simply for their inability to afford bail, according to the office of State Sen. Robert Hertzberg (D-Van Nuys), who co-authored the measure. The bill would require, except when a person is arrested for specified violent felonies, that a pretrial services agency conduct a risk assessment and prepare a report that recommends conditions of release.