New Mexico Lawmaker Proposes Bill to Increase Homeowners Insurance Transparency

“The question isn’t whether insurers should assess risk. They must,” said Rep. Anita Gonzales (D-Las Vegas). “The question is whether homeowners and regulators understand how that risk is being assessed.”

New Mexico is facing a historic crisis in home insurance availability, and state lawmakers are now moving to pull back the curtain on the “black box” algorithms insurers use to drop coverage. Rep. Gonzales told the interim Courts, Corrections and Justice Committee on Wednesday that she intends to introduce a bill during the upcoming legislative session to force insurance companies to disclose the “catastrophe” modeling they use to justify canceling policies and raising premiums.

In 2025, insurers opted not to renew more than 6,600 policies—the highest number of non-renewals in state history and nearly triple the volume seen in 2021. For many, the only remaining option is the Fair Access to Insurance Requirements (FAIR) Plan, an “insurer of last resort” for those who cannot find private coverage.

The Black Box of Catastrophe Modeling

At the heart of the conflict is a shift in how insurance companies calculate risk. Rather than relying solely on historical data, firms are increasingly using sophisticated simulations to predict future disasters. Christian Myers, the chief actuary for the state Office of the Superintendent of Insurance, described these systems as a “black box.”

New Mexico Lawmaker Proposes Bill to Increase Homeowners Insurance Transparency — Photo: yahoo.com

These models run thousands of wildfire or disaster scenarios to determine the average expected loss for specific ZIP codes. They even simulate “worst-case scenarios,” such as a once-in-a-1,000-year wildfire, weighing factors like the housing profile and insurance rates of a given area to decide if a neighborhood is simply too risky to cover. The problem, as Gonzales points out, is that these models are often secret, leaving homeowners in the dark about why their coverage vanished overnight.

“The question is whether homeowners and regulators understand how that risk is being assessed; whether investments that reduce risk are being recognized; and whether homeowners have a meaningful path to improve that risk classification.” — Rep. Anita Gonzales

A Growing Reliance on the Insurer of Last Resort

The data suggests a clear geographic trend: the private market is retreating from the state’s most vulnerable forests. While the FAIR Plan has long served eastern New Mexico, where wind and hail are the primary threats, recent growth has spiked in wildfire-prone regions. Areas like Lincoln, Los Alamos, Santa Fe, Mora, and Otero counties are seeing the most significant increases in enrollees.

In San Miguel County, which was devastated by the 2022 Hermits Peak-Calf Canyon Fire, the reliance on the FAIR Plan grew by nearly 18% in a 21-month period, jumping from 286 to 337 policies. This trend is particularly alarming in a state that already struggles with some of the highest uninsured rates in the country.

Metric	Data Point	Timeline/Context
Total Non-Renewals	6,600+ policies	2025 (State Record)
FAIR Plan Enrollees	~7,400 to 7,800+	Dec 2024 to Aug 2026
San Miguel Co. FAIR Growth	18% Increase	21-month period

The Legislative Push for Transparency

If passed, the legislation would require insurance companies to:

Disclose the specific catastrophe models they use to state regulators.
Provide homeowners with clear information on how their specific risk is being evaluated.
Offer premium discounts for established risk-reduction steps.
Create a formal appeals process for homeowners who believe a risk determination is in error.

Gonzales is also considering expanding the bill to cover other hazards, citing recent flooding in northern New Mexico as a primary example of the evolving risk landscape. This effort follows a previous attempt to pass a similar bill (HB 204) during a 30-day session earlier this year, which failed to receive a hearing because it lacked the necessary governor’s designation for non-budgetary items.

Insurance Superintendent Alice Kane has signaled her support for the bill, indicating her office will lobby for it when the session begins on January 19.

Without this legislative intervention, New Mexico homeowners remain in a precarious position: spending money to protect their homes from fire, while the algorithms deciding their insurability remain a secret.

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