The Commissioner of Securities and Insurance (CSI), Montana State Auditor Troy Downing, has announced agency rulemaking to strengthen consumer rights in the bail bond industry.
The new rules come after an extended public comment period in which industry and consumers had a seat at the table. After a public hearing and initial comment period, CSI extended the public comment period to better understand how the proposed rules impact industry and consumers. Many of the public comments shaped the new rules.
“Following an extensive public comment period, our agency made changes to the proposed rules to better protect consumers and be less burdensome to industry.” Commissioner Downing said.
In 2003, the Montana State Legislature granted CSI the authority to regulate Surety Bail Insurance Producers, also known as Bail Bondsmen. With no rules adopted to date, the new rules take effect on April 16, 2021. Agency rulemaking carries the force of law.
“The public comment period showed us that most bail bond insurance producers already followed the rules being enacted as a matter of standard business practices. But, these rules are necessary because some took advantage of the inadequate regulatory framework─hurting consumers and the industry.” Downing continues, “In many cases, individuals using the services of a bond producer are the most vulnerable. These rules are a step in the right direction to protect consumers from bad actors.”
A typical premium on a bond in Montana is ten percent. The percentage of premium required for a bond is not regulated in statute and is only subject to marketplace competition. The new rules will establish how Bail Bondsmen maintain this premium. When received as cash or check, the producer has five days to deposit the money in an FDIC insured bank account or to be placed by the bond insurer in trust. When personal property, such as a vehicle, is received as collateral for the premium, the bond insurer must keep records of the transfer. These records are subject to CSI inspection upon request.
Downing says, “Inadequate record keeping leaves consumers at risk of losing their collateral.”
Under the new rules, Bail Bondsmen must provide a copy of the bond agreement to the individual when released from jail awaiting trial.