Gov. Michelle Lujan Grisham gestures during her State of the State address on Tuesday, Jan. 21, 2025. Her proposal described in the speech for a state-sponsored fire insurance program won’t happen this session, a spokesperson said. (Danielle Prokop / Source NM)
After announcing a proposal to create a state-sponsored fire insurance program in her State of the State address a month ago, Gov. Michelle Lujan Grisham will instead commission a study on the idea because her office failed to find a sponsor, according to a spokesperson for her office.
Citing the wildfires in Los Angeles and ones here in New Mexico, the governor dedicated part of her speech to announce the creation of a state-run fire insurance program separate from the private market.
“Fires spurred by climate change have also ravaged communities in our state, testing our patience and resilience as we struggle under the weight of natural disasters in our backyards,” Lujan Grisham said in her speech. “As if the fires themselves aren’t difficult enough, getting insurance protection is becoming impossible, either because it’s simply no longer available or exorbitantly expensive.”
The program would also be separate from the Fair Access to Insurance Requirements Plan, governor’s spokesperson Michael Coleman said after the speech, which was created by the Legislature in 1969 to serve as an insurer of last resort primarily in fire-prone areas.
The governor’s program would be structured similar to the state’s workers’ compensation fund, requiring initial state funding and “limited liability” to the state, with the ultimate goal of providing coverage to anyone who needs it, Coleman said.
But the governor’s office could not find a sponsor for the legislation, Coleman told Source New Mexico on Thursday afternoon. Instead, the governor will commission a study on the issue, a spokesperson said.
“The governor will keep pursuing this idea, but it won’t happen this session,” Coleman said in an email.
Several bills making progress this session aim to spur mitigation of fire-prone communities and homes, and revamp the FAIR plan. Senate Bill 81, which the state Office of the Superintendent of Insurance endorses, would increase coverage limits from $350,000 to $1 million for homes and also change the makeup of the FAIR plan board, which is now made up of insurance industry leaders, to include a climate scientist, a consumer advocate, a catastrophic risk management expert and others.
Since 2022, average premiums have increased 60% across the state, the OSI chief actuary recently testified, and insurers are increasingly canceling policies or refusing to renew them. The increases come as wildfires in New Mexico are occurring with more frequency and ferocity, including the state’s biggest-ever wildfire in 2022 and the most destructive, in terms of structures destroyed, last summer.