HOUSE BILL 204

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Anita Gonzales

 

 

 

 

 

AN ACT

RELATING TO INSURANCE; PROVIDING FOR WILDFIRE RISK MODELING AND UNDERWRITING GUIDELINES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of the New Mexico Insurance Code is enacted to read:

     "[NEW MATERIAL] HOMEOWNERS INSURANCE--UNDERWRITING--WILDFIRE RISK MODELS--REQUIREMENTS--RULES--DEFINITIONS.--

          A. An insurer that uses a wildfire risk model, catastrophe model or scoring method to assign risk shall provide to the superintendent, as a part of the insurer's rate filing, the wildfire risk model, catastrophe model or scoring method used to assign risk, including a description of the model, the impact of the model on rates, an actuarial justification for all rating factors, including mitigation discounts offered, and an explanation of the use of the model or method in underwriting decisions.

          B. To the extent data is available and as required by rule, an insurer shall submit to the superintendent, as part of the insurer's rate filings, information on how and whether the models or methods used for underwriting and rating account for statewide mitigation activities, such as forest treatment, investments in wildfire fighting and mitigation equipment and utility wildfire mitigation activities, undertaken pursuant to a wildfire mitigation plan approved by the superintendent.

          C. Models and methods submitted to the superintendent pursuant to this section shall be treated as trade secrets and not subject to disclosure pursuant to the Inspection of Public Records Act.

          D. An insurer that uses a wildfire risk model, a catastrophe model or a combination of models shall ensure that the following factors are either incorporated in the wildfire risk model, catastrophe model or combination of models or are otherwise demonstrably included in the insurer's underwriting and pricing:

                (1) property-specific mitigation actions, such as establishing defensible space, incorporating building hardening measures or receiving certification from a person with expertise in mitigation of properties against wildfire; and

                (2) community-level mitigation activities or designations, including forest treatment and other fuel reduction activities.

          E. If an insurer does not incorporate property- specific and community-level mitigation actions into its models, the insurer shall provide discounts to policyholders who can demonstrate that property-specific mitigation actions have been undertaken on the property to be insured or community-level mitigation actions have been undertaken in sufficient proximity to that property to reduce the risk of loss.

          F. An insurer shall post on its website readily accessible information on the premium discounts or incentives or other premium adjustments that are available to policyholders who undertake property-specific mitigation actions or provide evidence of community-level mitigation actions and the process for appealing a wildfire risk score. The website shall identify, as applicable:

                (1) property-specific mitigation actions for the policyholder to undertake and community-level mitigation actions that could result in a discount, incentive or other premium adjustment; and

                (2) the amount of the discount, incentive or other premium adjustment associated with each action.

          G. An insurer that provides a mitigation discount or that uses a wildfire risk model or risk score to underwrite, nonrenew, price, create a rate differential or surcharge the premium based upon the policyholder's or applicant's wildfire risk shall provide an annual written notice to each policyholder or applicant upon application for property insurance of the applicable mitigation discounts, the wildfire risk score and any other wildfire risk classification used by the insurer to underwrite, nonrenew, price, create a rate differential or surcharge the premium based upon the policyholder's or applicant's wildfire risk. The notice shall include:

                (1) a plain-language explanation of the wildfire risk score or other wildfire risk classification, including an explanation that insurers may use different models and have different risk score ranges that could result in different risk scores from other insurers;

                (2) the range of the scores or classifications that could potentially be assigned to the property;

                (3) the relative position of the score or classification assigned to the property to be insured within that range of possible scores or classifications provided by the insurer's risk model;

                (4) a written explanation of why the policyholder or applicant received the assigned score or classification that identifies the primary features of the property to be insured that influenced the assignment of the score or classification; and

                (5) the impact, if any, that each property- specific mitigation or community-level mitigation action could have on a wildfire risk score or classification assigned to the property to be insured.

          H. The insurer shall provide the wildfire risk score or classification to the policyholder or applicant:

                (1) for applicants, no later than fifteen days after the submission of the applicant's completed application to the insurer;

                (2) for policyholders, in an offer of renewal;

                (3) for policyholders that are not being offered a renewal, with the nonrenewal notice; and

                (4) for a policyholder or applicant, if the policyholder or applicant has completed a property-specific mitigation action or provides evidence of a community-level mitigation action in sufficient proximity to the property to be insured to reduce the risk of loss since the time of the last application to or renewal by the insurer, no later than thirty days after the submission to the insurer of the policyholder's or applicant's request that the insurer provide a revised wildfire risk score or wildfire risk classification.

          I. A policyholder or applicant for a policy of property insurance whose wildfire risk model score, wildfire risk classification assigned to the property to be insured or applicable mitigation discount is inaccurate and provides evidence of the property-specific or community-level mitigation action may appeal the score directly to the insurer. The insurer shall notify the policyholder or applicant in writing of the right to appeal the wildfire risk score or other wildfire risk classification or applicable mitigation discount when the score or classification or discount is provided to the policyholder or applicant as required by Subsection G of this section. If the policyholder or applicant appeals the wildfire risk score or other wildfire risk classification or applicable wildfire discount, the insurer shall acknowledge receipt of the appeal in writing within ten calendar days after receipt of the appeal. The insurer shall respond to the appeal in writing with a reconsideration and decision within thirty calendar days after receiving the appeal. If an appeal is denied, the insurer shall, upon request by the superintendent, forward a copy of the appeal and the insurer's response to the superintendent.

          J. This section applies only to homeowners insurance policies and property insurance policies covering residential condominium units and multifamily residential housing as provided in the Insurance Code.

          K. The superintendent shall promulgate rules to implement the provisions of this section, including rules on required discount ranges for full and partial mitigation in accordance with insurance institute for business and home safety standards.

          L. As used in this section:

                (1) "catastrophe model" means a tool, instrumentality, means or product, including a map-based tool, computer-based tool or simulation, that is used by an insurer to estimate potential losses from catastrophic events;

                (2) "community-level mitigation action" means a science-based mitigation action as demonstrated by a community- or neighborhood-level designation or certification or as undertaken by a government entity;

                (3) "property-specific mitigation action" means a science-based mitigation action as demonstrated by the wildfire prepared home designation from the insurance institute for business and home safety or by a similar mitigation program that includes a verification and certification process; and

                (4) "wildfire risk model" means a tool, instrumentality, means or product, including a map-based tool, computer-based tool or simulation, that is used by an insurer in whole or in part to measure or assess the wildfire risk associated with a residential property or community for purposes of rating, classifying or pricing based on wildfire risk or estimating risks or losses corresponding to the wildfire risk classifications."

     SECTION 2. APPLICABILITY.--The provisions of this act apply to insurance filings and insurance policy applications, renewals and surcharges after June 30, 2026.

     SECTION 3. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2026.

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