New Mexico 2025 Regular Session

New Mexico Senate Bill SB81 Compare Versions

Only one version of the bill is available at this time.

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28	28	SENATE BILL 81
29	29	57
30	30	TH LEGISLATURE
31	31	-
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33	33	STATE
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35	35	OF
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37	37	NEW
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39	39	MEXICO
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42	42	FIRST SESSION
43	43	,
44	44
45	45	2025
46	46	INTRODUCED BY
47	47	Peter Wirth and Harlan Vincent
48	48	AN ACT
49	49	RELATING TO INSURANCE; CREATING THE NEW MEXICO PROPERTY
50	50	INSURANCE PROGRAM ASSOCIATION BOARD TO ADMINISTER THE FAIR PLAN
51	51	ACT; ESTABLISHING BOARD DUTIES AND RESPONSIBILITIES; CREATING
52	52	NEW REQUIREMENTS FOR INSURANCE POLICIES OFFERED UNDER THE FAIR
53	53	PLAN ACT; PRESCRIBING FEES; MAKING AN APPROPRIATION; DECLARING
54	54	AN EMERGENCY.
55	55	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
56	56	SECTION 1. A new section of the FAIR Plan Act, Section
57	57	59A-29-1.1 NMSA 1978, is enacted to read:
58	58	"59A-29-1.1. [NEW MATERIAL ] DEFINITIONS.--As used in the
59	59	FAIR Plan Act:
60	60	A. "board" means the New Mexico property insurance
61	61	program association board;
62	62	B. "commercial property insurance" means insurance
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90	90	against direct loss to commercial property, including buildings
91	91	and building contents, resulting from the perils of fire,
92	92	perils covered under extended coverage, vandalism or malicious
93	93	mischief. "Commercial property insurance" does not include
94	94	commercial automobile insurance or farm risks;
95	95	C. "FAIR plan" means the fair access to insurance
96	96	requirement plan established by the board pursuant to the FAIR
97	97	Plan Act;
98	98	D. "member insurer" means an admitted insurer that
99	99	offers or sells any property insurance, including commercial
100	100	property insurance; and
101	101	E. "property insurance" means essential property
102	102	insurance against direct loss to residential property,
103	103	including buildings, building contents or builder's risk,
104	104	resulting from the perils of fires, perils covered under
105	105	extended coverage, vandalism or malicious mischief. "Property
106	106	insurance" does not include automobile insurance or farm
107	107	risks."
108	108	SECTION 2. A new section of the FAIR Plan Act, Section
109	109	59A-29-1.2 NMSA 1978, is enacted to read:
110	110	"59A-29-1.2. [NEW MATERIAL ] NEW MEXICO PROPERTY INSURANCE
111	111	PROGRAM ASSOCIATION BOARD--DUTIES.--
112	112	A. The "New Mexico property insurance program
113	113	association board" is created as the governing body of the New
114	114	Mexico property insurance program to administer the FAIR plan.
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143	143	The board consists of the following nine members:
144	144	(1) one member with experience in actuarial
145	145	science appointed by the superintendent representing property
146	146	and casualty insurers writing property insurance in the state;
147	147	(2) one member appointed by the superintendent
148	148	representing a reinsurance company with exposure to property
149	149	and casualty insurance risk in the state;
150	150	(3) one member with expertise in climate
151	151	science appointed by the governor;
152	152	(4) one member appointed by the governor
153	153	representing the interests of consumers and, to the extent
154	154	practicable, representing consumer advocacy organizations and
155	155	diverse geographic areas of the state;
156	156	(5) one member with experience in finance
157	157	appointed by the president pro tempore of the senate
158	158	representing property and casualty insurers writing property
159	159	insurance in the state;
160	160	(6) one member with experience in product
161	161	management appointed by the minority floor leader of the senate
162	162	representing property and casualty insurers writing property
163	163	insurance in the state;
164	164	(7) one member with experience in catastrophic
165	165	risk management appointed by the speaker of the house of
166	166	representatives representing property and casualty insurers
167	167	writing property insurance in the state;
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196	196	(8) one member appointed by the minority floor
197	197	leader of the house of representatives representing a New
198	198	Mexico-based property and casualty insurance trade association
199	199	that represents independent insurance agents licensed to write
200	200	property and casualty insurance in the state; and
201	201	(9) the superintendent or the superintendent's
202	202	designee, who shall serve as the chair of the board.
203	203	B. The term of office for appointed board members
204	204	is three years; provided that:
205	205	(1) each appointed member serves at the
206	206	pleasure of the authority who appointed the member;
207	207	(2) members initially appointed pursuant to
208	208	Paragraphs (1), (2), (6) and (7) of Subsection A of this
209	209	section shall serve an initial term of one year; and
210	210	(3) members initially appointed pursuant to
211	211	Paragraphs (3), (4), (5) and (8) of Subsection A of this
212	212	section shall serve an initial term of two years.
213	213	C. Appointed board members may serve three terms.
214	214	D. If a vacancy occurs on the board, the original
215	215	appointing authority shall appoint a new board member to
216	216	complete the remainder of the board member's term.
217	217	E. Appointed board members may receive per diem and
218	218	mileage pursuant to the Per Diem and Mileage Act, but shall
219	219	receive no other compensation, perquisite or allowance.
220	220	F. The attorney general shall provide legal
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249	249	representation to the board as necessary."
250	250	SECTION 3. Section 59A-29-2 NMSA 1978 (being Laws 1985,
251	251	Chapter 61, Section 2) is amended to read:
252	252	"59A-29-2. ORGANIZATION OF FAIR PLAN AND UNDERWRITING
253	253	ASSOCIATION.--The superintendent shall direct all insurers
254	254	licensed to write and writing essential property insurance, as
255	255	defined by the superintendent [of insurance ], in New Mexico on
256	256	a direct basis [are authorized, subject to approval and
257	257	regulation by the superintendent of insurance ] to establish and
258	258	maintain a FAIR plan and to establish and maintain an
259	259	underwriting association and to formulate and from time to time
260	260	amend the plan and articles of association and rules and
261	261	regulations in connection therewith and to assess and share on
262	262	a fair and equitable basis all expenses, income and losses
263	263	incident to such FAIR plan and underwriting association in a
264	264	manner consistent with the provisions of the FAIR Plan Act.
265	265	Such underwriting association shall be known as the "New Mexico
266	266	property insurance program"."
267	267	SECTION 4. Section 59A-29-4 NMSA 1978 (being Laws 1985,
268	268	Chapter 61, Section 4) is amended to read:
269	269	"59A-29-4. REQUIREMENTS OF PLAN AND AUTHORITY OF
270	270	ASSOCIATION.--The FAIR plan and articles of association shall
271	271	make provision for an underwriting association having authority
272	272	on behalf of its members to cause to be issued property
273	273	insurance policies and the authority to reinsure in whole or in
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302	302	part any such policies and to cede any such reinsurance. The
303	303	plan and articles of association shall provide, among other
304	304	things, for the perils to be covered, geographical area of
305	305	coverage, compensation and commission, assessments of members,
306	306	[the] sharing of expenses, income and losses on an equitable
307	307	basis, [cumulative weighted voting for the governing committee
308	308	of the association, the ] administration of the plan and
309	309	association and any other matter necessary or convenient for
310	310	the purpose of assuring fair access to insurance requirements."
311	311	SECTION 5. A new section of the FAIR Plan Act, Section
312	312	59A-29-4.1 NMSA 1978, is enacted to read:
313	313	"59A-29-4.1. [NEW MATERIAL ] FAIR PLAN REQUIREMENTS.--
314	314	A. The board shall establish a FAIR plan to provide
315	315	property and commercial property insurance to persons who are
316	316	unable to obtain insurance in the regular market.
317	317	B. The premium rates for the FAIR plan shall:
318	318	(1) not be excessive, inadequate or unfairly
319	319	discriminatory;
320	320	(2) be actuarially sound so that revenue
321	321	generated from premiums is adequate to pay for expected losses,
322	322	expenses and taxes;
323	323	(3) reflect the investment income of the plan;
324	324	and
325	325	(4) reflect the cost of reinsurance or other
326	326	capital risk transfer markets."
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355	355	SECTION 6. A new section of the FAIR Plan Act, Section
356	356	59A-29-4.2 NMSA 1978, is enacted to read:
357	357	"59A-29-4.2. [NEW MATERIAL ] PLAN OF OPERATION.--
358	358	A. The board shall establish and submit to the
359	359	superintendent a plan of operation for the FAIR plan that
360	360	provides for:
361	361	(1) the lines of insurance coverages to be
362	362	written;
363	363	(2) coverage limits not to exceed one million
364	364	dollars ($1,000,000) for property and five million dollars
365	365	($5,000,000) for each commercial property and a policy limit of
366	366	ten million dollars ($10,000,000) for commercial property;
367	367	provided that beginning in fiscal year 2027 and each fiscal
368	368	year thereafter, the board may adjust the coverage limits by an
369	369	amount that does not exceed the change between the penultimate
370	370	calendar year and the immediately preceding calendar year of
371	371	the consumer price index for housing published by the bureau of
372	372	labor statistics of the United States department of labor;
373	373	(3) the policy forms to be used;
374	374	(4) the perils to be covered;
375	375	(5) the establishment of reasonable
376	376	underwriting standards to determine the eligibility of a risk,
377	377	including mitigation requirements and property inspections;
378	378	(6) the compensation and commissions to be
379	379	paid to member insurers offering the FAIR plan;
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408	408	(7) the time frames for fees to be collected
409	409	from member insurers;
410	410	(8) the administration of the plan of
411	411	operation by the board; and
412	412	(9) any other matter necessary for the purpose
413	413	of assuring fair access to a FAIR plan.
414	414	B. The plan of operation and any amendments to the
415	415	plan of operation become effective upon written approval by the
416	416	superintendent.
417	417	C. The board may, on its own initiative or at the
418	418	request of the superintendent, amend the plan of operation,
419	419	subject to approval by the superintendent.
420	420	D. If the board fails to submit a plan of operation
421	421	that is approved by the superintendent by July 1, 2026, the
422	422	superintendent shall promulgate rules to implement and
423	423	administer the FAIR Plan Act.
424	424	E. If the superintendent determines that an
425	425	approved plan of operation is insufficient to satisfy the
426	426	requirements of the FAIR Plan Act, the superintendent shall
427	427	provide notice to the board of the superintendent's intent to
428	428	revoke approval of all or part of the plan of operation.
429	429	Within thirty days of the superintendent's notice, the board
430	430	may submit a revised plan of operation for the superintendent's
431	431	review and approval. If the board fails to submit a revised
432	432	plan of operation within thirty days, the superintendent may
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461	461	make specific changes to the existing plan of operation so that
462	462	the plan satisfies the requirements of the FAIR Plan Act."
463	463	SECTION 7. Section 59A-29-5 NMSA 1978 (being Laws 1985,
464	464	Chapter 61, Section 5) is amended to read:
465	465	"59A-29-5. CHANGES IN PLAN OR ARTICLES.--The [governing
466	466	committee of the New Mexico property insurance program may, on
467	467	its own initiative or at the request of the superintendent of
468	468	insurance, amend the plan and articles, subject to approval by
469	469	the superintendent] FAIR plan and articles of association may
470	470	be amended by the board on its own initiative, subject to
471	471	approval by the superintendent or at the direction of the
472	472	superintendent."
473	473	SECTION 8. A new section of the FAIR Plan Act, Section
474	474	59A-29-6.1 NMSA 1978, is enacted to read:
475	475	"59A-29-6.1. [NEW MATERIAL ] ENFORCEMENT.--
476	476	A. After notice and hearing, the superintendent may
477	477	suspend or revoke the certificate of authority to transact
478	478	insurance business in this state of a member insurer that fails
479	479	to timely pay an assessment or to comply with the plan of
480	480	operation.
481	481	B. As an alternative to suspension or revocation of
482	482	a certificate of authority, the superintendent may impose a
483	483	fine on any member insurer that fails to timely pay an
484	484	assessment or to comply with the plan of operation in an amount
485	485	that is the greater of:
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514	514	(1) the amount of the assessment plus interest
515	515	and the superintendent's cost of enforcement; or
516	516	(2) five thousand dollars ($5,000)."
517	517	SECTION 9. A new section of the FAIR Plan Act is enacted
518	518	to read:
519	519	"[NEW MATERIAL] ENTITIES THAT CAN SELL FAIR PLAN
520	520	POLICIES.--The board and the New Mexico property insurance
521	521	program shall not sell a policy subject to the FAIR Plan Act
522	522	directly to any person. A FAIR plan policy may only be issued
523	523	through a member insurer that shall, on behalf of a person,
524	524	include evidence of at least three declinations of coverage for
525	525	the property as part of the submittal of an application for a
526	526	policy with the New Mexico property insurance program."
527	527	SECTION 10. A new section of the FAIR Plan Act is enacted
528	528	to read:
529	529	"[NEW MATERIAL] ASSESSMENT OF FEES.--
530	530	A. The board may collect fees from member insurers
531	531	as needed for the New Mexico property insurance program to
532	532	remain solvent, subject to approval by the superintendent.
533	533	B. A member insurer assessed a fee pursuant to this
534	534	section may recoup the fee directly from the member insurer's
535	535	policyholders as a surcharge on the policyholders. The
536	536	surcharge may be recouped over a three-year period.
537	537	C. A member insurer shall not increase premiums
538	538	based on a fee assessed pursuant to this section.
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567	567	D. If the superintendent determines that the New
568	568	Mexico property insurance program is or may become insolvent,
569	569	the superintendent shall direct the board to collect fees in
570	570	accordance with this section.
571	571	E. The board may defer, in whole or in part, a fee
572	572	assessed to a member insurer if, in the opinion of the board,
573	573	payment of the fee would endanger the solvency of a member
574	574	insurer."
575	575	SECTION 11. A new section of the FAIR Plan Act is enacted
576	576	to read:
577	577	"[NEW MATERIAL] REPORTING REQUIREMENTS.--
578	578	A. On or before April 1, 2027, and each year
579	579	thereafter, the board shall submit a report to the
580	580	superintendent, in a form and manner prescribed by the
581	581	superintendent, that provides information on the:
582	582	(1) financial condition of the FAIR plan;
583	583	(2) number of policies and the coverage
584	584	available through the FAIR plan; and
585	585	(3) number and types of claims made under the
586	586	FAIR plan.
587	587	B. In addition to the annual reporting requirement,
588	588	the superintendent may require the board to submit quarterly
589	589	reports if the superintendent determines that quarterly
590	590	reporting is necessary to ensure the continued solvency of the
591	591	FAIR plan."
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620	620	SECTION 12. APPROPRIATION.--Fifty million dollars
621	621	($50,000,000) is appropriated from the general fund to the
622	622	office of superintendent of insurance for expenditure in fiscal
623	623	year 2026 to administer the FAIR Plan Act and fire mitigation
624	624	programs. Any unexpended or unencumbered balance remaining at
625	625	the end of fiscal year 2026 shall revert to the general fund.
626	626	SECTION 13. REPEAL.--Section 59A-29-9 NMSA 1978 (being
627	627	Laws 1985, Chapter 61, Section 9) is repealed.
628	628	SECTION 14. EMERGENCY.--It is necessary for the public
629	629	peace, health and safety that this act take effect immediately.
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