In late 2015 I spent about a month full time deeply exploring the bail bonds industry in the United States. Why? Because I saw a sign that said “Bail Bonds” and fell down a super interesting rabbit hole. I was joined on this journey by two friends, Nick Raushenbush and Tristan Zier.

As a quick primer- in the US, if you are accused of a crime and tried at the state level, you will often be offered “cash bail” as a means of pre-trial release. That means you put down cash or property to a value commensurate with the crimes you have been accused of, as a promise you will return for your trial, and you get to go home.

If you’re really rich (think Sam Bankman-Fried), you or your family and friends can just promise some assets, and the court will set you free. If you are only a bit rich, or worse yet, poor, you can engage the service of a bail bonds company to make this promise on your behalf, or you can stay in jail and await your trial.

If this sounds like a system that unfairly favors rich people, that’s because it’s exactly what it is. It’s also a system that generates revenues of $2b+ annually in the United States.

What we did

We talked to bail bondsmen, ex-convicts, surety companies, judges, criminal defense lawyers, the California Department of Insurance, and many others. We spent days poring over the laws.

We tried to figure out if it was possible to make cash bail cheaper (spoiler: it is) and fairer (spoiler: not really within the current system). But we realized it’s a super predatory industry that we wanted no part of.

I’m sad to say that the information we gathered seems mostly up to date nearly 10 years on (and in fact, some of the stats are worse). An increasing number of organizations are pushing for reform, and while there has been some reform, progress is very slow.

The post below goes into detail about the economics and mechanics of the bail bonds industry.

What is cash bail?

Cash bail is one of several methods of pre-trial release that are offered as part of state-level criminal trials in the United States. Pay an amount of money as a promise to show up to court and you can go home. You get the money back if you show up.

Judges set the bail amount at their own discretion, typically informed by a bail schedule (or bond schedule), as well as factors like the defendant’s criminal history, flight risk, and the severity of the charges. Bail amounts tend to be high and the average felony bail in the US is over $55,000. This is skewed by murder charges where the bail is typically >= $1m. Most people cannot afford bail and the bail bonds industry purports to solve this problem.

How bail bonds work

When people can’t afford bail, they call bail bondsmen. Bail bondsmen post a bond with the same face value as the defendant’s bail at the court or jailhouse. This isn’t cash; it’s a special piece of paper called a Surety Bond, a fascinating instrument backed by cash or assets. In exchange, the defendant pays a premium to the bondsman. This fee is typically 10% of the face value of the bond. This money is never refunded to the defendant.

There are three parties involved in a bail bond:

• the defendant (and often their family and friends as cosigners/guarantors)
• the bail bondsman/company
• an insurance company in the surety bonds business

There are a very small number of surety companies that underwrite bail – only ~8 in CA and around ~30 across the US. There are many thousands of bail bondsmen. It’s very easy to become a bail bondsman – you can get a license for ~$600 and a weekend class. It’s very difficult* to become a surety company – it’s a full blown insurance company regulated by the Department of Insurance in each state. It’s also very hard for new bail bondsmen to sign up with a surety company – they usually have to work with another well established bail bondsman (a Managing General Agent) to get up and running.

* but not impossible as you’ll see below.

Bail bond economics

When a bail bond is posted and the bondsman collects the fee, they remit between 10% and 20% of it to the surety company, and keep the rest. The surety company puts up to half of this money into an FDIC insured bank account called a “Build Up Fund” (BUF), which is used to pay for forfeitures. A forfeiture occurs when a bailed individual fails to appear (FTA).

Bail bond laws vary state to state. In CA, bail bondsmen automatically get 180 days to recover an individual that FTAs. This can be extended to 360 days on appeal. Only after 360 days will the court ask for the money to be paid, and there are lawyers that specialize in fighting off forfeitures on technicalities (like clerical errors) at this stage.

As a concrete example, for bail of $100k, the defendant will pay a bondsman $10k. The bondsman will pay the surety company $1.5k-$2k. The surety will put $500-$1k in a BUF account, and keep the rest as their fee.

The way that most of the larger bail bonds companies operate is that they will write bonds for just about anyone who wants them and can properly secure them with cosigners/guarantors. What we heard anecdotally is that when you write bail for everyone, up to 1 in 10 people will FTA.

But there is a saying in the bail bonds industry that “forfeitures take care of themselves”. Of those that FTA, more than 50% are typically recovered with no intervention on the part of the bondsman within 6 months. This is through a combination of re-arrests, defendants initially forgetting their trial dates (a major problem), family/friends turning in defendants, etc.

The industry typically bounty hunts 20-30% of people who FTA. Bail bondsmen get far reaching privileges over the people they write bonds for, such as the ability to pursue them across state lines, arrest them, and break into their homes without a warrant (note these privileges vary state to state). Bounty hunting isn’t just a reality TV show – it’s a reality in everyday life in the US. Bounty hunters are usually paid the bail bondsman’s fee on successful recapture of a fugitive.

When a forfeiture does occur, the chain of responsibility of who pays is quite interesting, and probably not what you would expect. The surety company will first liquidate the BUF to make payment to the court. Only when there is not enough money in the BUF they will use their own assets to pay the court. If the surety company has to use their own assets, they will sue the bail bondsman for the balance. The bail bondsman will then sue any cosigners and guarantors on the bond, and ultimately the defendant if they are ever recaptured.

Surety bonds are fascinating. They’re regulated as “insurance”, but the insurer can sue the “insured” to recover their losses. In fact surety bonds function more like a form of privatized accreditation with the surety company guaranteeing that the bonded party will meet the terms of the bond, for which they are paid a fee.

To break this all down; of 100 bonds written, ~10 will FTA, ~5-7 will resolve themselves, ~2-3 will be recaptured, and bondsmen are able to lawyer out of about half of the 1-3 forfeitures still on the table after 12 months. Even in the worst case scenario of a forfeiture, they are often able to recoup some or all of their money. This is how the bail bonds business is viable and often lucrative.

One other interesting point is that bail bonds are often “extinguished” or discharged within 10-60 days (when the trial is vacated or concluded), so the surety company can re-leverage their assets for 1-1.5% every 10-60 days.

Here’s a table showing the economics of writing 100 bonds for $100k each:

Item	Amount	Notes
Total Bail Amount	$10,000,000	100 bonds at $100k each
Total Premium*	$1,000,000	10% of total bail amount
Surety Company Fee	$150,000 - $200,000	15-20% of premium
Build Up Fund (BUF)	$75,000 - $100,000	Up to half of surety fee
Bondsman’s Gross Revenue	$800,000 - $850,000	Premium minus surety fee
Expected FTAs	~10	~10% of bonds
Self-Resolved FTAs	~5	~50% of FTAs
Bounty Hunted FTAs	~2-3	~20-30% of FTAs
Potential Forfeitures	~1-3	~Remaining FTAs
Actual Forfeitures	0-1	After legal interventions
Potential Forfeiture Cost	$0 - $100,000	Worst case: 1 full forfeiture

* as you’ll see below, a large portion of the premium ends up being debt, so it’s not quite as lucrative as it looks in the table above.

How bail bonds businesses are operated

There are a large number of smaller bail bonds companies, often “mom & pop” stores that are family businesses that have been going for decades. There are also several large players, such as All Pro, Aladdin and Bad Boy (in CA). Bail bonds companies are largely unable to differentiate on the top-line price of bail (10% standard, 8% for defendants retaining their own defense attorneys*). They do compete on the “downpayment” amount, which is the minimum that they will accept up front in order to write a bond. Usually bail bonds companies will require a downpayment which will cover their fees to the surety company at the minimum. Larger/more successful bail bonds companies negotiate lower fees with the surety companies, so can offer a lower downpayment to defendants.

* people who retain their own defense attorneys almost never FTA and can often afford to pay a substantial downpayment on the premium. This is why they get a preferred rate. Retaining your own private criminal defense attorney is an accepted criteria for preferred rate qualification by the DOI. Anecdotally, a private criminal defense attorney told us they had only had a single client FTA in 25 years.

Many bail bonds companies are essentially debt collection businesses. They bail out just about anyone who wants bail, even if they can’t afford to make the downpayment, then aggressively pursue payment from them and their family and friends. In many cases, bail bonds companies will sell this debt to third-party debt collection agencies. Bail agents are incentivized to get as much as possible up front through a small commission (typically 10-20%) on any monies received in the first 60 days.

Bail agents act largely as telephone operators, verifying as much as they can about each caller, securing cosigners, determining how much the defendant can afford up front, and then submitting bonds to the court or jailhouse. The bail bondsmen try to verify as much information as possible over the phone and figure out who the defendant can get to co-sign on the bond. Each bail bondsman operates with a preset limit for the face value of the bonds they can write, based on their agreement with the surety company. For larger bonds, they must seek approval from their managing general agent (MGA). Bail bondsmen will always seek co-signers for larger bonds.

The customer service varies widely between bail bond companies. Some are only interested in getting their money, then they never contact their customers again (unless they FTA). Others force their customers to check in with them on a regular basis to ensure they haven’t absconded. Sometimes they will even force their clients to wear ankle monitors, which the client has to pay for.

How Bail Bonds businesses acquire customers

Bail bonds are usually arranged by defendants or their family/friends. Every jail has a list of bail bonding companies beside their phones. Incarcerated individuals typically call a known bondsman or call anyone they can on this list who will bail them out.

Family and friends either visit a bail bonds office near the jailhouse, call the office, or go online to arrange the bond. Bail bondsmen generally prefer to deal with family or friends because they can secure payment and obtain a co-signer’s signature before posting the bond.

Bail bonds companies also try to get friendly with criminal defense lawyers because they are the channel that provides the highest quality customers.

Surety and bail

Surety companies that operate in the bail line typically all charge the same rates. Most states have defined a legal maximum bail amount, but few have defined a legal minimum bail amount. It’s therefore interesting that they all charge the same price. Surety companies must file their rates with the relevant Department of Insurance along with clear qualification criteria.

There are three ways to get into surety bail:

1. Start a brand new insurance company and qualify it in each state (expensive and time consuming - think years and millions of dollars)

2. Acquire and capitalize an existing insurance shell company (we were told these go for around $50k per state license and the takeover process can take 6-12 months, and you still need millions to capitalize)

3. Set up a “fronting” arrangement with an existing Surety. In this scenario you pay the Surety a yearly fee (I’ve heard around $200k) and a fee on the premium of each bond you write (negotiable and I’ve heard this can be pretty small, e.g., < 10%). You also need to set up a captive account with collateral to cover the bonds you write (this is negotiable but I think $500k-$1m is reasonable).

Once you have access to some “paper”, i.e., surety bonds, you can apply to the DOI for new rates. I’ve spoken to some insurance consulting firms about this and it can cost as little as $50k to do a US-wide rate filing, and $7k or so to do it on a state by state basis.

There are costs associated with running the Surety business - actuarial and accounting, and managing the funds. I think it’s possible to skip most of this with fronting, but consultants can also offer these services. Surety businesses keep their collateral in low-risk investments with some in cash.  Sureties must satisfy reserve ratios required by state regulation.

Current State of Bail

The current state of bail in the United States underscores deep systemic inequalities. According to a 2022 report by the U.S. Commission on Civil Rights, approximately 60% of the jail population is incarcerated pre-trial because they cannot afford bail. Note that when we did the research 10 years ago, the number was “only” 54%. For many of these individuals, their inability to pay results in prolonged detention, often disrupting their employment, housing, and family life—regardless of their ultimate guilt or innocence.

The Role of Judges and the 8th Amendment

Judges play a critical role in setting bail but are often constrained by legal and constitutional frameworks. The 8th Amendment prohibits “excessive bail”, requiring that bail amounts be commensurate with the alleged crime and the risk posed by the defendant. However, it does not guarantee bail in all cases. In some jurisdictions, judges can deny bail entirely for defendants deemed dangerous or a flight risk. Conversely, in cases where denial is not legally permissible, judges may set prohibitively high bail to discourage release - effectively sidestepping the intent of the 8th Amendment.

Pretrial Services: An Alternative to Bail Bonds

At the federal level, cash bail has been largely replaced by Pretrial Services (PTS), which focus on risk assessment and supervision instead of financial guarantees. PTS programs evaluate a defendant’s likelihood of appearing in court and their potential danger to the community, then recommend appropriate conditions for release. Advocates argue that PTS reduces wealth-based detention and offers a more equitable alternative to cash bail.

The bail bonds industry, however, opposes the expansion of PTS, often labeling it as “socialism for criminals.” Research shows that supervised release programs can match or even exceed the effectiveness of bail bonds in ensuring court appearances. However, PTS programs face their own challenges, including inconsistent implementation, limited funding, and concerns about bias in risk assessment tools. For more on these issues, see the Pretrial Justice Institute’s research and their report on using technology to enhance Pretrial Services.

Federal vs. State Systems

Defendants charged with crimes at the state level sometimes see their cases elevated to federal court, where cash bail is less common, and supervised release is the norm. Ironically, defendants often prefer being charged at the federal level due to these practices. Unfortunately, most criminal cases remain at the state level, where cash bail is entrenched and reforms progress more slowly. For example, while federal courts have embraced e-filing and electronic records systems, many state courts still rely on outdated paper-based processes.

State-Level Bail Reform

Bail laws vary widely across states. Four states - Illinois, Kentucky, Oregon, and Wisconsin - have abolished commercial bail bonding, replacing it with alternatives such as direct cash deposits or Pretrial Services. In most other states, the bail bonds industry is regulated by Departments of Insurance (DOI). Texas stands out, where elected bail boards oversee the industry.

The bail bonds industry wields considerable influence through powerful lobbying organizations like the American Bail Coalition (ABC). These groups advocate for maintaining the current system, framing bail bonds as a “user-funded solution” that imposes no cost on taxpayers. While industry advocates claim that bail bonds are the most effective way to ensure court appearances, studies challenge this assertion, showing that non-financial release methods, such as supervised release programs, can achieve similar or better outcomes without the financial burden on defendants.

How to make cash bail cheaper

We figured out that it’s possible to lower the price of bail by getting setup as a surety business and filing lower rates with target states. There are worksheets that the DOIs provides for figuring out if the rates are acceptable. Insurance consultants can handle all of this and make the numbers come out correctly for whatever rates you want to file.

Existing bail bonds businesses don’t want to lower the price. So you’d also need to create a separate corporation that has a bail bonds license. This corp would most likely remit 100% of fees less any costs to the surety company, which is an inversion of the typical bail bonds company and surety relationship. Essentially the surety should be a direct writer, though I think a separate legal entity has to hold the license for the purposes of writing the bail bonds.

The safest way to do this would be to go after low risk customers through criminal defense lawyers, at least initially. They are incentivized to save their clients as much money as possible as the bail bond fees often compete with their own fees, and would make an ideal initial channel partner.

But this wouldn’t make the system any fairer for lower income defendants.

How to put a band aid on the situation

Clearly cash bail and bail bonds need to go away. However, it’s going to be a long and hard fight to get rid of commercial bail bonding entirely, if it’s even possible. Bail reform has been on the agenda for decades and things seem to be getting worse, rather than better (increase in average bail, decrease in own recognizance release, growing jail populations). The bail bond industry has a strong grip on its position and letting go isn’t an option for them. They are even trying to get in on probation by encouraging laws that would allow convicts to pay a fee for early probation, or use a bail bonds company to put up a bond if they can’t afford the fee.

The Envision Freedom fund (formerly Brooklyn Bail fund) is doing some amazing work to help poorer New Yorkers on misdemeanor charges. Unfortunately, this model just won’t scale without a constant inflow of cash. The risk of forfeiture is real and the penalties are high. They would need to have many millions of dollars in cash in order to start bailing people out who are on felony charges, and they would be constantly hemorrhaging cash through FTAs.

I think there’s a way to have an immediate impact that can help people now, without a change in legislation - start a more ethical surety bail business, with a mission to drive the price of bail into the ground. There’s no legal reason that the price is 10% (in most states). But nobody in the industry is incentivized to make it cheaper.

Surety companies have to agree the rates with the DOI (all filings are public). In CA, there is no legally defined max/min on the rates, but all the surety companies have filed the same rates (with the exception of one surety we found that had a 7% rate for clients who retain their own lawyers and pay the full fee up front).

It should be possible to run a surety bail business without making any money out of bail, with a focus on:

• Helping the poorest people who can’t currently afford bail
• Forcing down the cost and weakening the industry as a whole
• Investing in research and technology that can be used to carry out better risk analysis and management
• Supporting clients by connecting them with relevant services, e.g., rehabilitation

It may even be possible to write bail bonds for free if the risk analysis is accurate enough and a lot of the process can be automated. Courts and jailhouses are slowly moving towards accepting e-filed bonds, and the number of people searching online for bail bonds has been steadily increasing for a decade (Google Trends). Surety companies have a lot of their assets in investments, so they are making money even without the extra leverage they get from writing bonds. There are lots of types of surety bonds, and you could run a surety business that makes money from other types of surety, using the proceeds to prop up a loss making bail bonds line.

There are also failure modes for such a business with extremely desirable side effects, i.e., forcing everyone else to bring down the price.

However, the cost of release if you are low risk should be zero, and this is not likely to happen within the current system. The bail bonds industry will fight tooth and nail to keep this from happening.