Committee debates overhaul of Fair Plan board, adopts amendment and tables bill

Senate Bill 81, which would restructure the state'administered fair plan for property insurance and raise coverage limits, drew hours of testimony from lawmakers, insurers, the Fair Plan board and consumer advocates before the House Judiciary Committee adopted a sponsor amendment and then tabled the bill.

The bill's sponsor, Sen. Gabriel Wirth, outlined the proposal as a response to widespread nonrenewals and cancellations in New Mexico's private insurance market. “This is a program created in 1969, which provides an alternative to homeowners and businesses whose policies have been canceled,” Wirth said, adding that the state has seen “over 10,000 nonrenewals since 2021.” He described the amended bill as a compromise that raises residential coverage limits and changes board appointment authorities.

Why it matters: Lawmakers and stakeholders described the measure as an attempt to keep homes insurable in wildfire and other high-risk areas while preserving fiscal soundness. Sponsors and the Office of the Superintendent of Insurance (OSI) said they want the Fair Plan to be actuarially sound and to encourage mitigation so homeowners can return to the open market. Opponents warned the changes would raise premiums for many policyholders and could disrupt how the Fair Plan issues policies.

Key provisions and debate

The Senate floor amendment reported to the committee raised the Fair Plan's residential dwelling limit to $750,000 (from earlier, lower amounts discussed) and lowered an earlier proposed commercial cap to $2 million as part of a compromise. The bill also would expand the Fair Plan board from nine to 11 members and change how members are appointed, adding industry appointees and consumer-knowledge seats. It would add a mitigation component tied to IBHS (Institute for Business & Home Safety) standards so consumers could qualify for the plan and potentially reduce future premiums by hardening homes.

Sen. Wirth said the bill's authors sought a balance between industry and consumer representation on the board: appointments would include industry-designees and several seats appointed by legislative leaders, the attorney general and the superintendent. The bill also would make the board choose its own chair rather than the superintendent automatically filling that role.

Industry groups argued the draft as circulated contained drafting errors that could disrupt Fair Plan operations. Brent Moore, a registered lobbyist for the American Property Casualty Insurance Association who said he has worked with the Fair Plan for 15 years, testified the current draft would require member insurers to issue policies in a way that's inconsistent with how the Fair Plan currently sells and issues policies. “If you pass the bill in its current form, you will shut down operations by the Fair Plan,” Moore said, noting roughly 7,000 policyholders currently on the plan might be affected.

Regulators, actuaries and board members answered detailed procedural and financial questions. Christian Myers, identified as chief actuary at the OSI, said current Fair Plan premiums were about 20% below what would be actuarially sound and that raising limits alone would not avoid a needed base rate increase. “The policies that are currently on the fair plan, I estimate are 20% too low,” Myers said. He added that if the plan were widened to cover higher-value policies, additional premium differences would apply above baseline coverage.

Consumer and advocacy voices offered mixed testimony. Members of the Fair Plan board and agents pressed the committee to fix drafting errors and preserve existing coverages for current policyholders; some consumer advocates and environmental groups backed the bill's mitigation emphasis, saying it helps families recover after wildfire losses.

Committee action and next steps

The committee allowed public testimony, heard multiple sponsor and OSI explanations, and then took committee-level action. Members adopted a sponsor amendment (amendment 74 as recorded in the hearing). Shortly after adopting that amendment, the committee voted to table the amended bill; the tabling motion succeeded on a recorded vote (7 yes, 4 no). By tabling the bill the committee halted immediate consideration; sponsors indicated they would continue work and return with technical fixes.

What was not decided or remains unclear

Lawmakers and witnesses repeatedly flagged drafting and policy details that the committee did not finalize: a statutory drafting error in a section on who issues Fair Plan policies (the bill's language briefly suggested member insurers would be the issuer, which board and regulator witnesses called a mistake); whether a state appropriation would be included (a previously proposed $50 million appropriation was described in testimony as removed from the amendment); and precise timing and method for mitigation compliance and underwriting procedures (the bill would leave many operational specifics to the Fair Plan's underwriting rules and OSI procedures).

The committee's tabling leaves the bill available for sponsors to revise and return. Sponsors said they want a board composition and operational approach that keeps the Fair Plan solvent while enabling more homeowners in risk-prone areas to obtain coverage and to incentivize mitigation.

Ending note

Supporters described the bill as emergency-driven by recent wildfire losses and by constituents who report being unable to close real-estate transactions without insurance. Critics warned of higher premiums for low-income and rural policyholders and urged careful technical drafting so the plan's 7,000-plus current policyholders would not lose coverage during a transition.