HB 204

                                1  HOUSE BILL 204
                                2      57TH LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2026
                                3  INTRODUCED BY
                                4  Anita Gonzales
                                5
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                                8
                                9
                                10  AN ACT
                                11   RELATING TO INSURANCE; PROVIDING FOR WILDFIRE RISK MODELING AND
                                12   UNDERWRITING GUIDELINES.
                                13
                                14   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
                                15        SECTION 1.    A new section of the New Mexico Insurance Code
                                16   is enacted to read:
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                                17        "[NEW MATERIAL] HOMEOWNERS INSURANCE--UNDERWRITING--
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                                18   WILDFIRE RISK MODELS--REQUIREMENTS--RULES--DEFINITIONS.--
                                19  A.   An insurer that uses a wildfire risk model,
                                20   catastrophe model or scoring method to assign risk shall
                                21   provide to the superintendent, as a part of the insurer's rate
                                22   filing, the wildfire risk model, catastrophe model or scoring
                                23   method used to assign risk, including a description of the
                                24   model, the impact of the model on rates, an actuarial
                                25   justification for all rating factors, including mitigation
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                                1    discounts offered, and an explanation of the use of the model
                                2    or method in underwriting decisions.
                                3  B.   To the extent data is available and as required
                                4    by rule, an insurer shall submit to the superintendent, as part
                                5    of the insurer's rate filings, information on how and whether
                                6    the models or methods used for underwriting and rating account
                                7    for statewide mitigation activities, such as forest treatment,
                                8    investments in wildfire fighting and mitigation equipment and
                                9    utility wildfire mitigation activities, undertaken pursuant to
                                10   a wildfire mitigation plan approved by the superintendent.
                                11  C.   Models and methods submitted to the
                                12   superintendent pursuant to this section shall be treated as
                                13   trade secrets and not subject to disclosure pursuant to the
                                14   Inspection of Public Records Act.
                                15  D.   An insurer that uses a wildfire risk model, a
                                16   catastrophe model or a combination of models shall ensure that
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                                17   the following factors are either incorporated in the wildfire
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                                18   risk model, catastrophe model or combination of models or are
                                19   otherwise demonstrably included in the insurer's underwriting
                                20   and pricing:
                                21  (1)   property-specific mitigation actions, such
                                22   as establishing defensible space, incorporating building
                                23   hardening measures or receiving certification from a person
                                24   with expertise in mitigation of properties against wildfire;
                                25   and
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                                1  (2)   community-level mitigation activities or
                                2    designations, including forest treatment and other fuel
                                3    reduction activities.
                                4  E.   If an insurer does not incorporate property-
                                5    specific and community-level mitigation actions into its
                                6    models, the insurer shall provide discounts to policyholders
                                7    who can demonstrate that property-specific mitigation actions
                                8    have been undertaken on the property to be insured or
                                9    community-level mitigation actions have been undertaken in
                                10   sufficient proximity to that property to reduce the risk of
                                11   loss.
                                12  F.   An insurer shall post on its website readily
                                13   accessible information on the premium discounts or incentives
                                14   or other premium adjustments that are available to
                                15   policyholders who undertake property-specific mitigation
                                16   actions or provide evidence of community-level mitigation
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                                17   actions and the process for appealing a wildfire risk score.
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                                18   The website shall identify, as applicable:
                                19  (1)   property-specific mitigation actions for
                                20   the policyholder to undertake and community-level mitigation
                                21   actions that could result in a discount, incentive or other
                                22   premium adjustment; and
                                23  (2)   the amount of the discount, incentive or
                                24   other premium adjustment associated with each action.
                                25  G.   An insurer that provides a mitigation discount
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                                1    or that uses a wildfire risk model or risk score to underwrite,
                                2    nonrenew, price, create a rate differential or surcharge the
                                3    premium based upon the policyholder's or applicant's wildfire
                                4    risk shall provide an annual written notice to each
                                5    policyholder or applicant upon application for property
                                6    insurance of the applicable mitigation discounts, the wildfire
                                7    risk score and any other wildfire risk classification used by
                                8    the insurer to underwrite, nonrenew, price, create a rate
                                9    differential or surcharge the premium based upon the
                                10   policyholder's or applicant's wildfire risk.   The notice shall
                                11   include:
                                12  (1)   a plain-language explanation of the
                                13   wildfire risk score or other wildfire risk classification,
                                14   including an explanation that insurers may use different models
                                15   and have different risk score ranges that could result in
                                16   different risk scores from other insurers;
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                                17  (2)   the range of the scores or classifications
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                                18   that could potentially be assigned to the property;
                                19  (3)   the relative position of the score or
                                20   classification assigned to the property to be insured within
                                21   that range of possible scores or classifications provided by
                                22   the insurer's risk model;
                                23  (4)   a written explanation of why the
                                24   policyholder or applicant received the assigned score or
                                25   classification that identifies the primary features of the
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                                1    property to be insured that influenced the assignment of the
                                2    score or classification; and
                                3  (5)   the impact, if any, that each property-
                                4    specific mitigation or community-level mitigation action could
                                5    have on a wildfire risk score or classification assigned to the
                                6    property to be insured.
                                7  H.   The insurer shall provide the wildfire risk
                                8    score or classification to the policyholder or applicant:
                                9  (1)   for applicants, no later than fifteen days
                                10   after the submission of the applicant's completed application
                                11   to the insurer;
                                12  (2)   for policyholders, in an offer of renewal;
                                13  (3)   for policyholders that are not being
                                14   offered a renewal, with the nonrenewal notice; and
                                15  (4)   for a policyholder or applicant, if the
                                16   policyholder or applicant has completed a property-specific
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                                17   mitigation action or provides evidence of a community-level
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                                18   mitigation action in sufficient proximity to the property to be
                                19   insured to reduce the risk of loss since the time of the last
                                20   application to or renewal by the insurer, no later than thirty
                                21   days after the submission to the insurer of the policyholder's
                                22   or applicant's request that the insurer provide a revised
                                23   wildfire risk score or wildfire risk classification.
                                24  I.   A policyholder or applicant for a policy of
                                25   property insurance whose wildfire risk model score, wildfire
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                                1    risk classification assigned to the property to be insured or
                                2    applicable mitigation discount is inaccurate and provides
                                3    evidence of the property-specific or community-level mitigation
                                4    action may appeal the score directly to the insurer.       The
                                5    insurer shall notify the policyholder or applicant in writing
                                6    of the right to appeal the wildfire risk score or other
                                7    wildfire risk classification or applicable mitigation discount
                                8    when the score or classification or discount is provided to the
                                9    policyholder or applicant as required by Subsection G of this
                                10   section.    If the policyholder or applicant appeals the wildfire
                                11   risk score or other wildfire risk classification or applicable
                                12   wildfire discount, the insurer shall acknowledge receipt of the
                                13   appeal in writing within ten calendar days after receipt of the
                                14   appeal.    The insurer shall respond to the appeal in writing
                                15   with a reconsideration and decision within thirty calendar days
                                16   after receiving the appeal.    If an appeal is denied, the
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                                17   insurer shall, upon request by the superintendent, forward a
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                                18   copy of the appeal and the insurer's response to the
                                19   superintendent.
                                20  J.   This section applies only to homeowners
                                21   insurance policies and property insurance policies covering
                                22   residential condominium units and multifamily residential
                                23   housing as provided in the Insurance Code.
                                24  K.   The superintendent shall promulgate rules to
                                25   implement the provisions of this section, including rules on
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                                1    required discount ranges for full and partial mitigation in
                                2    accordance with insurance institute for business and home
                                3    safety standards.
                                4  L.   As used in this section:
                                5  (1)   "catastrophe model" means a tool,
                                6    instrumentality, means or product, including a map-based tool,
                                7    computer-based tool or simulation, that is used by an insurer
                                8    to estimate potential losses from catastrophic events;
                                9  (2)   "community-level mitigation action" means
                                10   a science-based mitigation action as demonstrated by a
                                11   community- or neighborhood-level designation or certification
                                12   or as undertaken by a government entity;
                                13  (3)   "property-specific mitigation action"
                                14   means a science-based mitigation action as demonstrated by the
                                15   wildfire prepared home designation from the insurance institute
                                16   for business and home safety or by a similar mitigation program
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                                17   that includes a verification and certification process; and
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                                18  (4)   "wildfire risk model" means a tool,
                                19   instrumentality, means or product, including a map-based tool,
                                20   computer-based tool or simulation, that is used by an insurer
                                21   in whole or in part to measure or assess the wildfire risk
                                22   associated with a residential property or community for
                                23   purposes of rating, classifying or pricing based on wildfire
                                24   risk or estimating risks or losses corresponding to the
                                25   wildfire risk classifications."
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                                1  SECTION 2.   APPLICABILITY.--The provisions of this act
                                2    apply to insurance filings and insurance policy applications,
                                3    renewals and surcharges after June 30, 2026.
                                4  SECTION 3.   EFFECTIVE DATE.--The effective date of the
                                5    provisions of this act is July 1, 2026.
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