the Best Market Segment Report, “Bail premiums are rising amid friction between reform proponents and opponents,” notes the contentious debate between those who view cash bail as discriminatory against the wealthy population and those who believe that Limiting or eliminating cash bail leads to increased crime rates is ongoing. Legislation implemented in recent years has been designed to dramatically transform, if not largely eliminate, the use of cash bail as the primary means of pre-trial detention, leaving businesses in the bail market that focus solely on the surety insurance fearing that reform efforts will drastically reduce or eliminate their business.
However, according to the report, predictions that the surety industry would become obsolete have proven premature, although overall direct premiums for surety bond insurance issued have shown some fluctuation in recent years. The declines of 3.1% in 2017 and 3.9% in 2018 are likely partly attributable to major reforms in some states that took place during those years, but since then the DPW for surety insurers has bounced back. Direct premiums written on surety bonds (DPW) reached
The nominal amounts of guarantees subscribed followed a similar trend, increasing steadily from 2013 to 2016 before decreasing slightly over the following two years. Since then, the total has rebounded to
“Although some organizations have reduced their positions, most have increased their direct premium, indicating that they are keeping abreast of bail reform changes in different states and remain in the market competing for business,” said
Significant disruptions in the surety bond insurance segment of the surety bond market, driven by criminal justice reform, have become a reality in many jurisdictions. Depending on the states where they write, insurers may need to diversify further, either into states that have yet to enact reforms or by providing other types of bonding coverage to offset the potential loss of premiums due. restrictions on cash deposits. AM Best will continue to monitor the financial conditions of rated and unrated surety 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 is also available at http://www.ambest.com/v.asp?v=ambailbonds1221.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Based at
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