Summary:

 Senate Bill 81 (SB 81) creates the New Mexico Property Insurance Program Association Board to administer the FAIR Plan Act; establishes Board duties and responsibilities; creates new requirements for insurance policies offered under the FAIR Plan Act; prescribes fees; makes an appropriation; and declares an emergency. 

Legislation Overview:

 Senate Bill 81 (SB 81) creates a new section of the FAIR Plan Act as follows.

Definitions are provided for:

•	"board", which means the New Mexico Property Insurance Program Association Board (NMPIPAB); 
•	"commercial property insurance" means insurance against direct loss to commercial property, including buildings and building contents, resulting from perils such as fire, vandalism or malicious mischief;
•	"commercial property insurance" is now defined as insurance that does not include commercial automobile insurance or farm risks; 
•	"FAIR plan" means the fair access to insurance requirement plan established by the board pursuant to the FAIR Plan Act; 
•	"member insurer" means an admitted insurer that offers or sells any property insurance, including commercial property insurance; and 
•	"property insurance" means essential property insurance against direct loss to residential property, including buildings, building contents or builder's risk, resulting from perils such as fire, vandalism or malicious mischief.” (This section stipulates that "property insurance" does not include automobile insurance or farm risks.")

A new section of the FAIR Plan Act is enacted to detail the composition and duties of the NMPIPAB.

The NMPIPAB is created as the governing body of the New Mexico Property Insurance Program to administer the FAIR Plan.

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; (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. 
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. Specific terms for various board member categories are delineated, and the process for filling a vacancy is detailed. Appointed board members may receive per diem and mileage pursuant to the Per Diem and Mileage Act, but are to receive no other compensation. 

The Attorney General is to provide legal representation to the board as necessary.

Stylistic changes are made to Section 59A-29-2 NMSA 1978.

A new section of the FAIR Plan Act, Section 59A-29-4.1 NMSA 1978, is enacted to provide the following requirements:

•	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; and

•	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.

A new section of the FAIR Plan Act, Section 59A-29-4.2 NMSA 1978, is enacted to provide the following requirements and stipulations:

•	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 (with provisions for adjustments); (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; (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. 

•	 The plan of operation and any amendments to such plan become effective upon written approval by the superintendent. 

•	The board may amend the plan of operation, subject to approval by the superintendent. 

•	If the board fails to submit a plan of operation that is approved by the superintendent by July 1, 2026, the superintendent is to promulgate rules to implement and administer the FAIR Plan Act. 

•	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 make specific changes to the existing plan of operation so that the plan satisfies the requirements of the FAIR Plan Act.

A new section of the FAIR Plan Act, Section 59A-29-6.1 NMSA 1978, is enacted to stipulate that 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. 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 (1) the amount of the assessment plus interest and the superintendent's cost of enforcement; or (2) five thousand dollars ($5,000).

A new section of the FAIR Plan Act is enacted to state that the board and the New Mexico Property Insurance Program may 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 will 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.

A new section of the FAIR Plan Act is enacted to state the following:

•	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.
•	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. 
•	A member insurer shall not increase premiums based on a fee assessed pursuant to this section. 
•	If the superintendent determines that the New Mexico Property Insurance Program is or may become insolvent, the superintendent is to direct the board to collect fees in accordance with this section. 
•	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.

A new section of the FAIR Plan Act is enacted to require that or before April 1, 2027, and each year thereafter, the board must submit a report to the superintendent 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. 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.

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 is to revert to the General Fund. 

Section 59A-29-9 NMSA 1978  is repealed. 

An emergency is declared, stating that it is necessary that this Act take effect immediately.
 

Current Law:

 There is currently no New Mexico Property Insurance Program Association Board appointed for oversight and administration of the FAIR Plan Act; at this time the New Mexico Office of the Superintendent of Insurance administers the Act. Further, the requirements and stipulations provided in the amended and new material are not included as stated herein, and the proposed appropriation is not available. 

Amendments:

 Amended February 7, 2025

STBTCa/SB 81: The Senate Tax, Business and Transportation Committee amends Senate Bill 81 as follows:

1. On page 7, line 25, after "insurers", insert ", and their licensed producers,". 
2. On page 12, line 4, strike "year 2026" and insert in lieu thereof "years 2026 and 2027". 
3. On page 12, line 6, strike "2026" and insert in lieu thereof "2027".