(Source New Mexico) New Mexico’s insurance regulator is asking lawmakers for $50 million to expand what its staff calls its “insurer of last resort,” as homeowners across the state report private property insurers continue to cancel their policies, refuse to renew them or hike up premium prices.

The Office of the Superintendent of Insurance is seeking the one-time appropriation at next year’s legislative session, as it rolls out a pilot program increasing coverage in Lincoln County. That area was hit hard by fire and floods this year.

The money would allow the state to increase payouts for property owners from its state-run insurance company, which they said has proved a lifeline for property owners seeking to rebuild or stay insured in fire-prone areas.

The OSI has had a state-run insurance program, known as the Fair Access to Insurance Requirements, or FAIR Plan, since 1969. The nonprofit insurance organization is there for New Mexicans who are unable to secure insurance in the normal marketplace.

Recipients have to be denied by two private insurers to qualify, according to Alice Kane, the state superintendent of insurance.

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A one-time infusion of $50 million would represent a huge increase in funding for the nonprofit, which is largely funded by premiums. It has operated off of about $4.5 million in revenues in recent years, according to recent tax filings. The program also was slightly in the red last year, generating $4.6 million in revenues – mostly premiums and spending a little more than $5 million, including $3.7 million in claims.

The program still has about $9.8 million in assets, despite the small loss, according to its filings.

The OSI did not respond to a request Friday from Source New Mexico for more details on how an expanded FAIR Plan would work

The current program caps payouts at $350,000 for homes and $1 million for commercial properties, Kane told lawmakers at a meeting of the Legislative Finance Committee on Thursday.

With the help of the additional funding, Kane said, an expanded FAIR Plan could increase coverage to $1 million for homes and $2 million for commercial properties. It would also serve as a “backstop” in case a catastrophe occurs before the state can collect enough in premiums to make the program sustainable.

That increase in coverage makes sense given the increase in home prices, Kane said. While $250,000 might have paid for an “amazing house” back in the 70s and 80s, “the numbers have gone up dramatically” since then, she said.

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More than 1,000 homes were destroyed due to the South Fork and Salt fires and ensuing floods this summer, according to local estimates. Some residents have reported difficulty finding any private insurance coverage as they seek mortgages to rebuild.

Federal mortgage providers like Fannie Mae and Freddie Mac accept New Mexico’s FAIR plan, Kane said, which is a big help for those trying to rebuild.

It’s unclear how many policies across the state have been canceled or were subject to huge price hikes, but the office said the number has increased statewide.

The office has circulated a handout showing some counties saw huge increases in home insurance premiums between 2020 and 2023, ranging between 41 percent and 47 percent in Hidalgo, Roosevelt and Curry counties. On average, New Mexico premiums increased by 16 percent in the same time period, and the average annual premium is $1,817.

Despite the uptick in cancellations and non-renewals, insurance companies remain largely profitable in New Mexico, according to the OSI. Still, insurers here did have losses in 2016, 2017 and 2022. The two biggest wildfires in state history occurred in 2022.

Nationally, insurers have paid out more in claims than they received in premiums over the last decade, according to the OSI.

Source New Mexico is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Source New Mexico maintains editorial independence. Contact Editor Shaun Griswold for questions: info@sourcenm.com. Follow Source New Mexico on Facebook and X.