2.3 Approved Premium Rates & Collateral Restrictions

2.3 Approved Premium Rates and Collateral

Premium and collateral are different funds with different legal treatment. Premium is the authorized charge for the bond; collateral secures the surety against loss and remains subject to return.

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Premium rate — F.S. 648.33

F.S. 648.33 does not hard-code a percentage or dollar minimum in the statutory text. It requires every bail bond agent to charge the premium rate filed with and approved by the Office of Insurance Regulation (OIR). The agent may not:

• charge more than the approved rate;
• charge less than the approved rate; or
• furnish a free bond.

For an actual transaction, consult the currently approved rate filing. On an exam item asking what F.S. 648.33 itself says, choose the filed-and-approved-rate rule rather than an uncited fixed dollar calculation.

Rules 69B-221.105 and .110 address permissible charges and premium treatment. Rule .115 governs the premium receipt. F.S. 648.295 treats premiums and other funds belonging to insurers or others as trust funds in the licensee's fiduciary custody and requires accounting and payment to the person entitled to them.

Collateral amount and acceptable forms — F.S. 648.442(1)

Collateral or indemnity required by the agent must be reasonable in relation to the bond. The statute does not impose a blanket rule that collateral can never exceed the face amount.

The statute permits listed forms, including a promissory note, indemnity agreement, real-property mortgage in the insurer's name, UCC filing, and another security type approved by DFS. A quitclaim deed may not be taken as collateral.

For cash above $50,000 per bond, the amount over $50,000 must be payable to the insurer by cashier's check, U.S. postal money order, certificate of deposit, or wire transfer and must be remitted to and held by the insurer.

Receipt and fiduciary custody

When an agent accepts collateral, F.S. 648.442(2) requires a written, numbered receipt giving a detailed account of the collateral. Copies of documents rendered under subsection (1) must also go to the indemnitor.

Before forfeiture, collateral is received and held in the insurer's name by the agent in a fiduciary capacity and kept separate from the agent's other funds or assets. When the agent receives more than $5,000 cash or its equivalent, the entire amount must be forwarded immediately to the insurer. An interest-bearing collateral account may accrue for the benefit of the person who provided the collateral; the agent, insurer, and MGA may not make pecuniary gain from it.

Conversion after forfeiture

If forfeiture occurs, the agent or insurer must give the indemnitor and principal 10 days' written notice of intent to convert collateral to cash. Notice goes by certified mail to their last known addresses.

Conversion must occur within a reasonable time. The amount exceeding the face value of the bond, less actual and reasonable conversion expenses, must be returned. Expenses ordinarily may not exceed 20 percent of the bond's face value, although a court may allow proven actual reasonable expenses above that ceiling.

Returning collateral — F.S. 648.571

Do not cite F.S. 648.442(3) as the 21-day return provision. The timing rule is in F.S. 648.571:

1. When a bond discharge is provided to the surety or its agent, collateral must be returned within 21 days.
2. If the court does not provide a written discharge within 7 days after a written request and diligent inquiry, the bond is automatically canceled and the collateral must be returned within 21 days after that written request.
3. In addition to criminal penalties, DFS must impose an administrative fine equal to five times the collateral amount for a violation.

F.S. 648.442 separately establishes the surety's liability if the agent or MGA fails to return collateral after final termination of liability.

Exam distinctions