Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Woods/Ramos
LAST UPDATED
ORIGINAL DATE 2/17/2025
SHORT TITLE Additional Unfair Insurance Claims Practice
BILL
NUMBER Senate Bill 221
ANALYST Rodriguez
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
No fiscal
impact
No fiscal
impact
No fiscal
impact
No fiscal
impact
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Duplicates Senate Bill 403
Sources of Information
LFC Files
Agency Analysis Received From
Office of Superintendent of Insurance (OSI) New Mexico Office of the Attorney General (NMAG)
SUMMARY
Synopsis of Senate Bill 221
Senate Bill 221 (SB221) adds a new prohibited unfair claims practice that would prevent insurers
from improperly categorizing policyholder inquiries as claims when no coverage applies, no
payment is made, and there is no fraud involved.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
FISCAL IMPLICATIONS
SB221 has no fiscal impact.
SIGNIFICANT ISSUES
Section 59A-16-20 NMSA 1978 defines unfair and deceptive insurance practices, prohibiting
insurers from engaging in actions that knowingly harm policyholders, including
misrepresentation of policy details, failure to promptly respond to claims, delaying decisions on
coverages after proof of loss, unfair settlement practices, and forcing litigation by offering low
settlement claims. Senate Bill 221 – Page 2
SB221 adds an additional provision to unfair and deceptive insurance practices that would
prevent insurers from treating an inquiry as a claim, specifically when no coverage applies, no
payment is made, and there is no fraud involved. This would affect policies in which insureds are
penalized, for example through higher premiums, for filing a claim.
The Office of the Superintendent of Insurance (OSI) notes that this bill is in response to a
Federal Emergency Management Agency (FEMA) requirement for insured individuals to obtain
a denial of coverage letter from an insurer to claim federal benefits. This requirement caused
insurers to record claims for individuals, which could ultimately raise their premiums or lead to a
full denial of coverage. OSI writes:
Senate Bill 221 (SB221) would prevent insurance companies from increasing, non-
renewing, or denying coverage to a consumer who made an inquiry about coverage or
placed a claim for a factual situation where the policy did not offer coverage.
SB221 prohibits insurers from knowingly committing or engaging in a business practice
that would penalize policyholders seeking to obtain a denial letter or to inquire about
their coverage.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
SB221 duplicates Senate Bill 403.
TECHNICAL ISSUES
The New Mexico Office of the Attorney General (NMAG) notes that the proposed language
could be clarified. NMAG states:
The exact words for the third condition for not treating an inquiry as a “claim,” is that
“the claim does not involve deceptive practices on the part of the insured.” Because the
whole point [of SB211] is that the inquiry is not to be treated as a claim, the word
“inquiry” should replace the word “claim” in that instance.
OSI raises concerns over the use of “deceptive” in the third condition. OSI writes:
Use of the term “deceptive” in the Insurance Code generally relates to acts engaged in by
an insurer, not the insured. The term “insurance fraud” would appear to be the more
appropriate term. Insurance Fraud is defined in Section 59A-16C-3 of the Insurance Code
and is usually committed by an insured.
JR/rl/SR