WILDFIRE RISK INSURANCE MODELS & UNDERWRITING

HB0204

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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