By Sherry Robinson
All She Wrote

When we look back at fires, California’s and New Mexico’s, we’ll see that the victims got burned twice – once during the event and again when they tried to rebuild and found they couldn’t get insurance. That’s if they had any to begin with. Many don’t.

This is not a rant about insurance companies. Two of my early jobs were with insurance companies. I spent years writing about them as a business writer, so I don’t expect them to act like charities.

New Mexico and California have property insurance problems driven by climate change. The disasters are growing so big and so costly that insurers can no longer provide coverage. Many have been losing money. But California’s insurance troubles are far worse than ours.

The state of California placed price controls on home insurance; any increase in premiums above 7% requires approval from the state insurance commissioner, who is elected. He wants to keep his job, so he’s said no to insurance companies wanting to raise rates to match their risk, and companies have left California. Last year, State Farm, the biggest home insurance provider in the state, cancelled thousands of policies in risky places saying that in the event of a major disaster the allowable premiums would tank the company.

With no other options, Californians have turned to the FAIR (Fair Access to Insurance Requirements) Plan, reported the Los Angeles Times. Provided by the state to cover uninsurable people and funded by a surcharge on insurers still doing business there, it provides limited coverage. That fallback is now strained.

California voters have only themselves to blame for their insurance drought. In 1988 they passed Proposition 103, which required the state to approve premium increases.

California’s ballot proposition system is to governance what chewing gum is to hot pavement. If anybody ever suggests introducing it in New Mexico, vote them out of office quickly.

It’s a bit comforting that we’re not in California’s boat, but New Mexicans have serious issues too. In August the Legislative Finance Committee, meeting in Ruidoso, heard testimony from the state’s insurance regulator that insurers are increasingly reluctant to renew or approve policies in riskier areas since this year’s wildfires, and home insurance premiums have spiked. (We can probably add Roswell’s floods to the list.)

LFC Chairman and Sen. George Muñoz, D-Gallup, commented, “I got denied on a commercial property in the middle of Gallup next to a fire hydrant because of wildfires.”

The Office of the Superintendent of Insurance (OSI) sued State Farm, the state’s largest insurer, saying it improperly denied some claims after the South Fork and Salt fires. The state lost, reported Source New Mexico.

New Mexico hasn’t seen quite the exodus of insurance companies as California; despite losses in 2016, 2017 and 2022, they’re mostly profitable here. Nationally insurers have paid out more than they’ve taken in over the last ten years.

New Mexico also has a FAIR Plan, and it too is a fallback that costs more than conventional insurance and provides minimal coverage — $350,000 for homes and cash value, not replacement cost, for a home that’s lost. Protection is too thin to get a mortgage. You can see how this cascades into economic impacts on builders and local economies.

OSI can’t use a stick to force coverage, so it’s leaning toward carrots. That might mean property owners creating defensible spaces around their homes or new zoning regulations that prevent building in high-risk areas. It might mean beefing up FAIR plans but stopping short of competition with insurers. Fire departments might ask for more help.

We’ll probably see insurance-related bills in the upcoming legislative session. Let’s hope they get serious attention and don’t get lost in the usual crush of a 60-day session.

Sherry Robinson is a longtime New Mexico reporter and editor. She has worked in Grants, Gallup, the Albuquerque Journal, New Mexico Business Weekly and Albuquerque Tribune. She is the author of four books. Her columns won first place in 2024 from New Mexico Press Women.

By: George Munoz

As we welcome the dawn of a new year, it is natural to reflect on the journey that has brought us here. In doing so, I, as a state senator and Chair of the Senate Finance Committee, often find myself reflecting not only on my own personal experiences but also on the transformative changes that have shaped New Mexico over the years. We stand at a critical moment, one that presents us with both the lessons of our past and the opportunity to build a brighter, more resilient future. The steps we take now will determine the legacy we leave for future generations of New Mexicans.

In reflecting on the challenges we have faced, I remember the times when we had to make difficult decisions, especially during moments of economic turmoil. In 2009, 2017 and again in 2020, the volatility of oil prices caused major disruptions to the state’s budget.

The oil price crash of 2017 forced us to confront the reality that New Mexico’s economy was too dependent on one source of revenue. We had to make tough cuts to balance the budget and swept every penny we could find from under the cushions, affecting education and public services. But as always, New Mexicans have proven to be resilient. We didn’t just weather these storms—we adapted.

I also recall the urgency of 2020, when the pandemic hit and forced us to come together in unprecedented ways. We quickly convened a special session to pass solvency measures that would allow us to continue to operate as a state while providing the resources necessary to combat the effects of COVID-19. These experiences have taught me invaluable lessons about the importance of preparation, adaptability, and, above all, diversification.

One of the hallmarks of my tenure has been my commitment to diversification. While we, as a state, are deeply grateful for the vast natural resources like oil and gas that have strengthened our permanent fund to unprecedented levels and account for over 40% of our annual budget, we can no longer rely on oil and gas alone to fuel our state’s economy. As we saw in the aftermath of the price crash, economic volatility puts us at risk. That’s why, in 2017, I was proud to work on the creation of the New Mexico Bioscience Authority. By investing in the bioscience sector, we’ve laid the foundation for a new economic pillar in our state—one that promises not only growth but also high-quality jobs and technological advancement.

This focus on diversification has also extended to education. I remember a time when we could barely afford to fund the lottery scholarship, and students struggled to afford higher education. Today, we now offer tuition-free education to all New Mexico students, ensuring that a lack of financial resources will not limit a person’s potential. This is not just an investment in individuals, but an investment in the future workforce of New Mexico.

Over the last decade, we’ve also made significant strides in early childhood education. I recall when our early childhood programs were limited to whatever the federal government could fund. Today, New Mexico boasts the largest sovereign early childhood education fund in the nation, a testament to the importance of investing in our youngest learners.

I’ve also had the distinct privilege of serving as Chair of the Senate Finance Committee, and through this role, I’ve worked to address the volatility of our state’s revenue streams. One of the most significant steps we’ve taken has been to invest today’s money in ways that will pay dividends far into the future. For example, an estimated $3.04 billion in school tax and $4.74 billion in federal royalty distributions is estimated to reach the severance tax permanent fund between now and 2030 as a result of these efforts. To give you context, the severance tax permanent fund had an ending balance of $9.5 billion in 2024; essentially, in the next 5 years we will have saved almost the same amount of money we have been saving for the last 47 years within this permanent fund. This approach, though not always immediately gratifying, is the key to ensuring long-term sustainability and stability for New Mexico; it is safe to say that we have made New Mexico recession proof and are now able to withstand a future economic downturn.

Looking ahead, the work is far from over. We must continue to diversify our economy, invest in economic development initiatives, and prioritize job creation, while also addressing some of the most pressing challenges of our time. Mental health care is a priority. For too long, mental health has been an underserved and underfunded area. Remember too that prior administrations effectively destroyed our state’s behavioral services and we have yet to recover. The pandemic has only highlighted the critical need for accessible mental health services, and it is time we build a system that truly supports the mental well-being of all New Mexicans.

Furthermore, we must continue to focus on improving the quality of life for all of our residents. This means tackling issues such as healthcare, housing and homelessness, infrastructure, and public safety and crime prevention in ways that are meaningful, equitable, and sustainable. The work we do today will determine how future generations experience life in New Mexico, and it is incumbent upon us to make thoughtful, deliberate investments in their well-being.

Lastly, we must prepare our state for an economic boom by electrifying and modernizing our electric grid. Ensuring we have sites ready for economic development and growth. And investing in our local small businesses and entrepreneurs.

As we embark on this new year, I am committed to continuing the work of diversifying our economy, addressing mental health needs, and improving the overall quality of life for all New Mexicans. We’ve come a long way, but we still have much to accomplish. Together, we can design a New Mexico that is not just resilient in the face of adversity but a model of opportunity and prosperity for future generations.

George Munoz is a New Mexico State Senator, representing District 4. He is also the Chair of the State Finance Committee.