Best’s Market Segment Report: Bail Bond Insurance Premiums Grow Amid Friction Between Reform Advocates, Opponents

Despite a concerted push for bail reform throughout the United States, bail bond insurance premiums in the most-recent five years have grown by 11% and in 2021 were at its highest level since 2016, according to a new AM Best report.

The Best’s Market Segment Report, “Bail Bond Premiums Grow Amid Friction Between Reform Advocates and Opponents,” notes the contentious debate between those who view cash bail as discriminating against the non-affluent population and those who believe that limiting or eliminating cash bail results in rising crime rates is ongoing. Legislative measures implemented the past few years were designed to substantially transform—if not largely eliminate—the use of cash bail as a primary means of pretrial detention, leaving surety market firms that focus solely on bail bond insurance concerned that reform efforts will severely curtail or eliminate their business.

However, according to the report, predictions that the bail bond industry would become obsolete have proved to be premature, although aggregate bail bond insurance direct premiums written (DPW) have shown some fluctuation in recent years. Declines of 3.1% in 2017 and 3.9% in 2018 likely are partially attributable to major reforms in certain states that took place in those years, but since then, DPW for bail bond insurers have rebounded. Bail bond DPW grew to $1.50 billion in 2021 from $1.38 billion in the previous year.

Face amounts of bail bonds written have followed a similar trend, growing consistently from 2013 to 2016 before declining modestly in the following two years. The total since has rebounded to $16.5 billion as of year-end 2021, the second-highest total in the most recent 10-year period. In 2021, 26 individual companies wrote bail premium, down slightly from the 28 companies that wrote premium in 2019.

“Although some organizations have cut back their positions, most have increased their direct premium, indicating that they are staying current with bail reform changes in different states, and remain in the market competing for business,” said David Blades, associate director, industry research and analytics, AM Best.

Significant disruption in the surety market’s bail bond insurance segment driven by criminal justice reform has become a reality in many jurisdictions. Depending on the states where they write, insurers may need to diversify further, either to states that have not yet passed reforms or by providing other types of surety coverage to make up for the potential loss in premium from restrictions on cash bail. AM Best will continue to monitor the financial conditions of rated and unrated bail bond insurers.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=327736.

A video discussion of this report also is available at http://www.ambest.com/v.asp?v=ambbailbonds1221.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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