DEPARTMENT OF REGULATORY AGENCIES
Division of Insurance
3 CCR 702-1
Administrative procedures
Emergency Regulation 09-E-05
CASH BONDING AGENT AND PROFESSIONAL CASH BAIL AGENT REPORTING REQUIREMENTS AND TAX PAYMENT METHOD AND LICENSURE REQUIREMENTS FOR PROFESSIONAL CASH BAIL AGENTS
Section 1 Authority
Section 2 Scope and Purpose
Section 3 Applicability
Section 4 Definitions
Section 5 Forms, Reports and Records
Section 6 Tax on Bail Bond Fees
Section 7 Qualification Bond
Section 8 Qualification for Licensure as a Professional Cash Bail Agent
Section 9 Procedures for Increase, Decrease and Release of Qualification Bond
Section 10 Severability
Section 11 Enforcement
Section 12 Effective Date
Section 13 History
Section 1 Authority
This regulation is promulgated and adopted by the Commissioner of Insurance under the authority of §§10-1-109(1), and 12-7-102(3), C.R.S.
Section 2 Scope and Purpose
The purpose of this emergency regulation is to provide timely processing of the renewal applications for Cash Bonding Agents and Professional Cash Bail Agents whose licenses expire by operation of law on January 1, 2010 pursuant to § 12-7-102(4), C.R.S., and to ensure that the qualification bonds posted by Cash Bonding Agents and Professional Cash Bail Agents are fully compliant with §§ 12-7-103(3)(a) and (8)(b), C.R.S.
Cash Bonding Agents or Professional Cash Bail Agents self-insure the liability of the bail bonds that they post with the Colorado courts by posting a qualification bond with the Colorado Division of Insurance in accordance with §§ 12-7-103(3)(a) and (8)(a), C.R.S. The qualification bond is intended to be posted with funds that are solely owned by the licensee and not a third party entity or individual. Underwriting of liability of bail bonds by a third party entity or individual results in the unauthorized transaction of insurance business by that third party entity or individual in violation of § 10-3-903, C.R.S., and creates a de facto bail insurance agency or bail general managing agency business model that is specifically not authorized in accordance with § 12-7-102(2), C.R.S.. The Colorado Division of Insurance is aware of some individuals who are not the sole owners of the monies that fund their qualification bonds that are posted with the Colorado Division of Insurance.
In order to ensure that all Cash Bonding Agents and Professional Cash Bail Agents are using assets that solely fund their qualification bonds and to be consistent with the interpretation of §§ 12-7-103(3)(a) and (8)(b), C.R.S., the Colorado Division of Insurance is removing a claims made bond as an option for satisfying the posting of a qualification bond. Allowing a licensee to submit a claims made bond is not only contrary to the laws governing Cash Bonding Agents and Professional Cash Bail Agents, but claims made bonds are unworkable from both an administrative perspective, as well as from a consumer protection and public interest point of view. The Colorado Division of Insurance cannot guarantee that the Colorado courts and public at large will be adequately protected with the use of claims made bonds for the underwriting of bail bond liability, nor can the Colorado Division of Insurance guarantee that licensees’ will be in compliance with the laws governing Cash Bonding Agents and Professional Cash Bail Agents with respect to the monies that fund or collateralize said claims made bonds.
The Colorado Division of Insurance’s interpretation of §§ 12-7-103(3)(a) and (8)(a), C.R.S., is based upon the intent of the Colorado General Assembly that Cash Bonding Agents and Professional Cash Bail Agents were not intended to create de facto insurance agencies or general managing agents or to engage in the unauthorized transaction of insurance business by underwriting liability of a third party entity or individual. The Colorado Division of Insurance’s interpretation of a qualification bond is also consistent with ensuring that those who engage in the business of bail as a Cash Bonding Agent or Professional Cash Bail Agent are financially responsible and have the personal financial backing in order to underwrite the bail bond liability they post with the Colorado courts.
The purpose of this emergency regulation is also to add the statutory citations that refer to Professional Cash Bail Agents in the Qualification Bond form attached hereto as Appendix ID so that pending applicants will submit the proper Qualification Bond form with their license application.
The Colorado Division of Insurance finds that the immediate adoption of this emergency regulation is imperatively necessary for the preservation of public health, safety, and welfare of the public.
A. This regulation describes the information which is required to be filed by Cash Bonding Agents and Professional Cash Bail Agents with the Division of Insurance, and the format which must be used in the semiannual reports. It also describes the method for the calculation and payment of taxes on fees charged by Cash Bonding Agents and Professional Cash Bail Agents.
B. Pursuant to §12-7-103(3) and (8) C.R.S., Cash Bonding Agents and Professional Cash Bail Agents are required to post a qualification bond in the amount of $50,000 to secure payment of defaulted bonds and to pay any final, nonappealable judgment for failure to return collateral, including costs and attorney's fees, if awarded. This regulation sets the terms and conditions for such qualification bonds.
C. Effective January 1, 2000, a new category of bail bonding agent known as Professional Cash Bail Agent was added to Article 7, Title 12, C.R.S. Professional Cash Bail Agents are licensed to transact bail bond business without posting a power-of-attorney from an authorized insurance company.
The Professional Cash Bail Agent designation will only be granted to agents who meet the statutory requirements for such designation.
D. This regulation also sets forth the procedures required for increase, decrease and release of the qualification bond.
Section 3 Applicability
This regulation shall apply to the following: any person currently licensed as a Cash Bonding Agent or a Professional Cash Bail Agent; any person seeking to renew a Cash Bonding Agent or a Professional Cash Bail Agent; any person seeking to obtain licensure as a Professional Cash Bail Agent; any Professional Cash Bail Agent seeking to increase or decrease the amount of the qualification bond and any Cash Bonding Agent or Professional Cash Bail Agent seeking the release of the qualification bond.
Section 4 Definitions
“Commissioner of Insurance” is defined as the office of the Commissioner of Insurance as established in §10-1-104(1), C.R.S. Reference to the Commissioner of Insurance in this Regulation means any past, present, or future Commissioner of Insurance who holds said appointed office.
“Qualification bond” is defined as any minimum asset in the amount of $50,000 that is solely owned and in the legal name of the Cash Bonding Agent or Professional Cash Bail Agent and the Colorado Division of Insurance and Commissioner of Insurance that can be liquidated at any time upon request by the Commissioner of Insurance in order to underwrite the bail bond obligations of the Cash Bonding Agent or Professional Cash Bail Agent for bail bonds written in Colorado courts.
Section 5 Forms Reports and Records
A. Each Cash Bonding Agent and Professional Cash Bail Agent shall report the following information to the Division of Insurance on the forms prescribed by the Division of Insurance and attached hereto as Appendix I. The reports shall be made semiannually and shall be filed with the Division of Insurance prior to July 31 for business written for the six month period between January and June, and prior to January 31 for business written during the six month period from July through December.
B. These reports shall contain the following information for each and every bond written:
1. The names of the person for whom such bail bonding agent has become surety;
2. The date the bond was written;
3. The amount of the bond issued by such bail bonding agent;
4. The court in which such bond was posted;
5. The fee for the bond charged by the bail bonding agent;
6. The amount of collateral or security received from insured principals or persons acting on behalf of such principals by such bail bonding agent on the bond;
7. Finalized total amount of premiums, commissions or fees charged; and
8. Such further information as the Division of Insurance may require including, but not limited to, residence and business addresses, financial statements and other business activities of the bail bonding agent.
C. If a Cash Bonding Agent or Professional Cash Bail Agent did not write any bail bonds during the particular six (6) month reporting period, the individual shall file a report stating "no bonds written" during this time period.
D. All reports required to be filed in this Section 5, must be filed in electronic format either by email to: , or via facsimile to: 303-869-0228. Paper reports will not be accepted by the Division of Insurance and will be rejected and returned to the Cash Bonding Agent or Professional Cash Bail Agent with instructions for proper filing. Any paper report that is rejected must be refiled electronically and must be timely filed as required by Section 5.A. Noncompliance with this requirement may result in sanctions against the Cash Bonding Agent or Professional Cash Bail Agent as set forth in Section 11 below.
Section 6 Tax on Bail Bond Fees
A. Each Cash Bonding Agent and Professional Cash Bail Agent shall pay to the Division of Insurance a tax on the fee charged for bail. The rate of tax on the gross fee shall be one percent as set forth in §10-3-209(1)(b)(I)(B), C.R.S. All applicable provisions of § 10-3-209(1), C.R.S. shall apply to the agent.
B. The taxes provided for in §§ 10-3-209 and 12-7-111, c.r.s. shall be due and payable to the Division of Insurance on the first day of March each year.
C. Cash Bonding Agents and Professional Cash Bail Agents shall file copies of the affidavit/summary pages from the bail bonding agent's January 31 and July 31 semiannual bail bond reports to the Division of Insurance with the tax payment (See appendix I).
Section 7 Qualification Bond
A. Qualification Bond Requirements for Cash Bonding Agents
1. The qualification bond deposited by a Cash Bonding Agent shall be held solely owned and in the name of the Cash Bonding Agent, the Commissioner of Insurance, and Colorado Division of Insurance, and shall meet the following requirements.
a. The Division of Insurance and Commissioner of Insurance must be designated as an authorized signatory with right of survivorship on any bank account, certification of deposit, commercial instrument, or security that funds the qualification bond. When designating the Commissioner of Insurance as an authorized signatory with right of survivorship, the office title shall only be used without reference to a particular Commissioner of Insurance.
b. The bank account, certificate of deposit, commercial instrument, or security must be in the legal name of the Cash Bonding Agent and not a trade name or other business name.
c. The qualification bond must consist of assets that are solely owned and in the name of the Cash Bonding Agent, which may be immediately liquidated by the Commissioner of Insurance or the Division of Insurance.
d. The qualification bond must be worth $50,000 net of any penalty for withdrawal or liquidation.
e. If the qualification bond does not comply with this Section 7.A.1., the Cash Bonding Agent will be required to substitute another qualification bond or to provide additional security.
f. If the qualification bond is an interest bearing instrument, the Cash Bonding Agent may receive interest thereon, unless the principal amount of the qualification bond falls below the required $50,000.
g. If the monies that fund the qualification bond consist of proceeds from a loan, promissory note or other financial arrangement, the terms of the loan, promissory note, and financial arrangement must be submitted to the Division of Insurance. If the qualification bond consists of monies from a loan, promissory note or other financial arrangement, such must be an arms-length transaction in which the agreement terminates upon a fixed period of time and any rate of return is not tied to any bail bond business posted by the Cash Bonding Agent but to an annual percentage rate. “Any bail bond business” means the financial arrangement cannot be tied to any premium or collateral or any other direct function to which a Cash bonding Agent conducts bail bond business.
2. Cash Bonding Agents licensed with the Division of Insurance who have posted qualification bonds that complied with previous versions of Colorado Insurance Regulation 1-2-13 must provide verification that the cash qualification bond satisfies the new requirements of Section 7.A.1. above as follows:
a. At the first renewal of a Cash Bonding Agent’s license subsequent to the effective date of this Regulation, the Cash Bonding Agent must produce the following:
(1) The qualification bond form prescribed by the Division of Insurance and attached hereto as Appendix ID to this Regulation.
(2) A copy of the bank account application, certificate of deposit, or commercial instrument or actual deposit of other security that evidences that the qualification bond is solely owned and in the legal name of the Cash Bonding Agent and the Division of Insurance and Commissioner of Insurance and that the Division of Insurance and Commissioner of Insurance are authorized signatories on the bank account, certificate of deposit, commercial instrument, or other security with a right of survivorship.