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SENATE BILL 81
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Peter Wirth and Harlan Vincent
AN ACT
RELATING TO INSURANCE; CREATING THE NEW MEXICO PROPERTY
INSURANCE PROGRAM ASSOCIATION BOARD TO ADMINISTER THE FAIR PLAN
ACT; ESTABLISHING BOARD DUTIES AND RESPONSIBILITIES; CREATING
NEW REQUIREMENTS FOR INSURANCE POLICIES OFFERED UNDER THE FAIR
PLAN ACT; PRESCRIBING FEES; MAKING AN APPROPRIATION; DECLARING
AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the FAIR Plan Act, Section
59A-29-1.1 NMSA 1978, is enacted to read:
"59A-29-1.1. [NEW MATERIAL ] DEFINITIONS.--As used in the
FAIR Plan Act:
A. "board" means the New Mexico property insurance
program association board;
B. "commercial property insurance" means insurance
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against direct loss to commercial property, including buildings
and building contents, resulting from the perils of fire,
perils covered under extended coverage, vandalism or malicious
mischief. "Commercial property insurance" does not include
commercial automobile insurance or farm risks;
C. "FAIR plan" means the fair access to insurance
requirement plan established by the board pursuant to the FAIR
Plan Act;
D. "member insurer" means an admitted insurer that
offers or sells any property insurance, including commercial
property insurance; and
E. "property insurance" means essential property
insurance against direct loss to residential property,
including buildings, building contents or builder's risk,
resulting from the perils of fires, perils covered under
extended coverage, vandalism or malicious mischief. "Property
insurance" does not include automobile insurance or farm
risks."
SECTION 2. A new section of the FAIR Plan Act, Section
59A-29-1.2 NMSA 1978, is enacted to read:
"59A-29-1.2. [NEW MATERIAL ] NEW MEXICO PROPERTY INSURANCE
PROGRAM ASSOCIATION BOARD--DUTIES.--
A. The "New Mexico property insurance program
association board" is created as the governing body of the New
Mexico property insurance program to administer the FAIR plan.
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The board consists of the following nine members:
(1) one member with experience in actuarial
science appointed by the superintendent representing property
and casualty insurers writing property insurance in the state;
(2) one member appointed by the superintendent
representing a reinsurance company with exposure to property
and casualty insurance risk in the state;
(3) one member with expertise in climate
science appointed by the governor;
(4) one member appointed by the governor
representing the interests of consumers and, to the extent
practicable, representing consumer advocacy organizations and
diverse geographic areas of the state;
(5) one member with experience in finance
appointed by the president pro tempore of the senate
representing property and casualty insurers writing property
insurance in the state;
(6) one member with experience in product
management appointed by the minority floor leader of the senate
representing property and casualty insurers writing property
insurance in the state;
(7) one member with experience in catastrophic
risk management appointed by the speaker of the house of
representatives representing property and casualty insurers
writing property insurance in the state;
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(8) one member appointed by the minority floor
leader of the house of representatives representing a New
Mexico-based property and casualty insurance trade association
that represents independent insurance agents licensed to write
property and casualty insurance in the state; and
(9) the superintendent or the superintendent's
designee, who shall serve as the chair of the board.
B. The term of office for appointed board members
is three years; provided that:
(1) each appointed member serves at the
pleasure of the authority who appointed the member;
(2) members initially appointed pursuant to
Paragraphs (1), (2), (6) and (7) of Subsection A of this
section shall serve an initial term of one year; and
(3) members initially appointed pursuant to
Paragraphs (3), (4), (5) and (8) of Subsection A of this
section shall serve an initial term of two years.
C. Appointed board members may serve three terms.
D. If a vacancy occurs on the board, the original
appointing authority shall appoint a new board member to
complete the remainder of the board member's term.
E. Appointed board members may receive per diem and
mileage pursuant to the Per Diem and Mileage Act, but shall
receive no other compensation, perquisite or allowance.
F. The attorney general shall provide legal
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representation to the board as necessary."
SECTION 3. Section 59A-29-2 NMSA 1978 (being Laws 1985,
Chapter 61, Section 2) is amended to read:
"59A-29-2. ORGANIZATION OF FAIR PLAN AND UNDERWRITING
ASSOCIATION.--The superintendent shall direct all insurers
licensed to write and writing essential property insurance, as
defined by the superintendent [of insurance ], in New Mexico on
a direct basis [are authorized, subject to approval and
regulation by the superintendent of insurance ] to establish and
maintain a FAIR plan and to establish and maintain an
underwriting association and to formulate and from time to time
amend the plan and articles of association and rules and
regulations in connection therewith and to assess and share on
a fair and equitable basis all expenses, income and losses
incident to such FAIR plan and underwriting association in a
manner consistent with the provisions of the FAIR Plan Act.
Such underwriting association shall be known as the "New Mexico
property insurance program"."
SECTION 4. Section 59A-29-4 NMSA 1978 (being Laws 1985,
Chapter 61, Section 4) is amended to read:
"59A-29-4. REQUIREMENTS OF PLAN AND AUTHORITY OF
ASSOCIATION.--The FAIR plan and articles of association shall
make provision for an underwriting association having authority
on behalf of its members to cause to be issued property
insurance policies and the authority to reinsure in whole or in
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part any such policies and to cede any such reinsurance. The
plan and articles of association shall provide, among other
things, for the perils to be covered, geographical area of
coverage, compensation and commission, assessments of members,
[the] sharing of expenses, income and losses on an equitable
basis, [cumulative weighted voting for the governing committee
of the association, the ] administration of the plan and
association and any other matter necessary or convenient for
the purpose of assuring fair access to insurance requirements."
SECTION 5. A new section of the FAIR Plan Act, Section
59A-29-4.1 NMSA 1978, is enacted to read:
"59A-29-4.1. [NEW MATERIAL ] FAIR PLAN REQUIREMENTS.--
A. The board shall establish a FAIR plan to provide
property and commercial property insurance to persons who are
unable to obtain insurance in the regular market.
B. The premium rates for the FAIR plan shall:
(1) not be excessive, inadequate or unfairly
discriminatory;
(2) be actuarially sound so that revenue
generated from premiums is adequate to pay for expected losses,
expenses and taxes;
(3) reflect the investment income of the plan;
and
(4) reflect the cost of reinsurance or other
capital risk transfer markets."
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SECTION 6. A new section of the FAIR Plan Act, Section
59A-29-4.2 NMSA 1978, is enacted to read:
"59A-29-4.2. [NEW MATERIAL ] PLAN OF OPERATION.--
A. The board shall establish and submit to the
superintendent a plan of operation for the FAIR plan that
provides for:
(1) the lines of insurance coverages to be
written;
(2) coverage limits not to exceed one million
dollars ($1,000,000) for property and five million dollars
($5,000,000) for each commercial property and a policy limit of
ten million dollars ($10,000,000) for commercial property;
provided that beginning in fiscal year 2027 and each fiscal
year thereafter, the board may adjust the coverage limits by an
amount that does not exceed the change between the penultimate
calendar year and the immediately preceding calendar year of
the consumer price index for housing published by the bureau of
labor statistics of the United States department of labor;
(3) the policy forms to be used;
(4) the perils to be covered;
(5) the establishment of reasonable
underwriting standards to determine the eligibility of a risk,
including mitigation requirements and property inspections;
(6) the compensation and commissions to be
paid to member insurers offering the FAIR plan;
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(7) the time frames for fees to be collected
from member insurers;
(8) the administration of the plan of
operation by the board; and
(9) any other matter necessary for the purpose
of assuring fair access to a FAIR plan.
B. The plan of operation and any amendments to the
plan of operation become effective upon written approval by the
superintendent.
C. The board may, on its own initiative or at the
request of the superintendent, amend the plan of operation,
subject to approval by the superintendent.
D. If the board fails to submit a plan of operation
that is approved by the superintendent by July 1, 2026, the
superintendent shall promulgate rules to implement and
administer the FAIR Plan Act.
E. If the superintendent determines that an
approved plan of operation is insufficient to satisfy the
requirements of the FAIR Plan Act, the superintendent shall
provide notice to the board of the superintendent's intent to
revoke approval of all or part of the plan of operation.
Within thirty days of the superintendent's notice, the board
may submit a revised plan of operation for the superintendent's
review and approval. If the board fails to submit a revised
plan of operation within thirty days, the superintendent may
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make specific changes to the existing plan of operation so that
the plan satisfies the requirements of the FAIR Plan Act."
SECTION 7. Section 59A-29-5 NMSA 1978 (being Laws 1985,
Chapter 61, Section 5) is amended to read:
"59A-29-5. CHANGES IN PLAN OR ARTICLES.--The [governing
committee of the New Mexico property insurance program may, on
its own initiative or at the request of the superintendent of
insurance, amend the plan and articles, subject to approval by
the superintendent] FAIR plan and articles of association may
be amended by the board on its own initiative, subject to
approval by the superintendent or at the direction of the
superintendent."
SECTION 8. A new section of the FAIR Plan Act, Section
59A-29-6.1 NMSA 1978, is enacted to read:
"59A-29-6.1. [NEW MATERIAL ] ENFORCEMENT.--
A. After notice and hearing, the superintendent may
suspend or revoke the certificate of authority to transact
insurance business in this state of a member insurer that fails
to timely pay an assessment or to comply with the plan of
operation.
B. As an alternative to suspension or revocation of
a certificate of authority, the superintendent may impose a
fine on any member insurer that fails to timely pay an
assessment or to comply with the plan of operation in an amount
that is the greater of:
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(1) the amount of the assessment plus interest
and the superintendent's cost of enforcement; or
(2) five thousand dollars ($5,000)."
SECTION 9. A new section of the FAIR Plan Act is enacted
to read:
"[NEW MATERIAL] ENTITIES THAT CAN SELL FAIR PLAN
POLICIES.--The board and the New Mexico property insurance
program shall not sell a policy subject to the FAIR Plan Act
directly to any person. A FAIR plan policy may only be issued
through a member insurer that shall, on behalf of a person,
include evidence of at least three declinations of coverage for
the property as part of the submittal of an application for a
policy with the New Mexico property insurance program."
SECTION 10. A new section of the FAIR Plan Act is enacted
to read:
"[NEW MATERIAL] ASSESSMENT OF FEES.--
A. The board may collect fees from member insurers
as needed for the New Mexico property insurance program to
remain solvent, subject to approval by the superintendent.
B. A member insurer assessed a fee pursuant to this
section may recoup the fee directly from the member insurer's
policyholders as a surcharge on the policyholders. The
surcharge may be recouped over a three-year period.
C. A member insurer shall not increase premiums
based on a fee assessed pursuant to this section.
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D. If the superintendent determines that the New
Mexico property insurance program is or may become insolvent,
the superintendent shall direct the board to collect fees in
accordance with this section.
E. The board may defer, in whole or in part, a fee
assessed to a member insurer if, in the opinion of the board,
payment of the fee would endanger the solvency of a member
insurer."
SECTION 11. A new section of the FAIR Plan Act is enacted
to read:
"[NEW MATERIAL] REPORTING REQUIREMENTS.--
A. On or before April 1, 2027, and each year
thereafter, the board shall submit a report to the
superintendent, in a form and manner prescribed by the
superintendent, that provides information on the:
(1) financial condition of the FAIR plan;
(2) number of policies and the coverage
available through the FAIR plan; and
(3) number and types of claims made under the
FAIR plan.
B. In addition to the annual reporting requirement,
the superintendent may require the board to submit quarterly
reports if the superintendent determines that quarterly
reporting is necessary to ensure the continued solvency of the
FAIR plan."
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SECTION 12. APPROPRIATION.--Fifty million dollars
($50,000,000) is appropriated from the general fund to the
office of superintendent of insurance for expenditure in fiscal
year 2026 to administer the FAIR Plan Act and fire mitigation
programs. Any unexpended or unencumbered balance remaining at
the end of fiscal year 2026 shall revert to the general fund.
SECTION 13. REPEAL.--Section 59A-29-9 NMSA 1978 (being
Laws 1985, Chapter 61, Section 9) is repealed.
SECTION 14. EMERGENCY.--It is necessary for the public
peace, health and safety that this act take effect immediately.
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