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Bail bond agents and bail insurers cannot keep the premium when a criminal defendant is denied bond and not released, the state Department of Financial Services reminded the insurance companies Tuesday.

In a letter to insurers, the Department of Financial Services reminded 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.”

In a statement, Superintendent Maria Vullo said that the department will “take action to combat unscrupulous practices in the industry.” “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.

“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,” Vullo said.

The state’s Court of Appeals, in Gevorkyan v. Judelson, No. 79, unanimously ruled in June that bond agents must return premiums when a defendant is denied bail (NYLJ, June 27).

Chief Judge Janet DiFiore, writing for the court, said if the court refuses to accept the bond, the bond “remains proposed.” The Legislature enacting Insurance Law Article 68 prevents professional bond agents from taking advantage of criminal defendants, she noted.

In the letter sent to insurers, the department says the Gevorkyan decision “applies to bail agents since they act as the agents of representatives of the insurers.”

“The Gevorkyan decision confirms that bail agents and insurers are prohibited from retaining the premium or compensation on a bail bond for any defendant that is not released from custody after a criminal court does not accept a bail bond as a result of a bail sufficiency hearing,” the letter said. “Such premium or compensation must be promptly returned to the person who provided it as soon as possible after the criminal court’s determination in the bail sufficiency hearing.”

While the decision from the Court of Appeals doesn’t address the right of an agent to receive compensation from an insurer when a defendant is not released from custody, whether the bail agent receives any compensation from the bail insurer depends on the contract between the agent and the insurer, the DFS letter signed by Laura Evangelista, deputy superintendent for the Insurance Division, said.