Two large wildfires that swept through Northern California were the very reason why Heather Vuchinich and her partner made the decision to move to the small village of Las Tusas in northern New Mexico.
But, before uprooting their lives, Vuchinich did some homework.
“When we asked people about this particular area, they said, ‘Oh no, you’ll be fine. We had one small forest fire 20 years ago. This isn’t an area prone to fires,’” Vuchinich said.
Then, just six months after they closed on the house, the federally-sparked Calf Canyon/Hermit’s Peak Fire roared through New Mexico – burning just over 340,000 acres in 2022.
The botched fire was the result of an escaped prescribed burn by the U.S. Forest Service to thin flammable material.
The blaze eventually crept through the nearby forest, through an adjacent pasture, and walked up to the side of their home, stopping just ten feet away from their wall. While they consider themselves “lucky,” Vuchinich said they sustained soot and smoke damage, lost a number of trees, and a historic bunkhouse dating back to 1865 went up in flames.
Shortly after came the premium increases.
“Our insurance company, the first year after the fire, they doubled it,” Vuchinich said. “We're going into the third year now, and we're really hoping we don't get canceled. I think we started at around $100 a month, and now we're at almost $300 a month.”
Fire insurance is becoming increasingly expensive and hard to come by in areas ravaged by wildfire in recent years.
New Mexico’s lawmakers – and Gov. Michelle Lujan Grisham the governor – are hoping to tackle the problem with several proposals this legislative session, one of which is rarely seen in the insurance market.
Vuchinich has a mortgage and most lenders require coverage, leaving her no other choice but to pay the new rate. But in New Mexico, homeowners are not legally required to carry coverage.
Because of the fires and other factors that year, insurers let 1 in 50 policies lapse due to the “risk profiles” of certain properties, according to the U.S. Federal Insurance Office.
The standard for insurers is to pay out between 40 and 60% of what they receive in premiums every year, typically referred to as a “loss ratio.” For the ZIP code Vuchinich lives in, this ratio was well over that – at a staggering 3516% in 2022.
Over time, continual high paid loss ratios can lead to rate increases, changes in policy terms and conditions, nonrenewals, or force companies to exit the market entirely.
That’s where the state is looking to intervene.
During her 2025 State of the State address, Gov. Lujan Grisham proposed a “state-sponsored,” risk-based fire insurance program outside the private market to “protect families and their homes – and to help make people whole when tragedy strikes.”
The bill has yet to be filed, but a spokesperson for the governor told KUNM that the program would “require initial state subsidies” to establish a baseline cash reserve and include risk mitigation requirements for coverage and provisions for “limited” state liability.
For now, the governor’s office said they are “working” on a bill sponsor and don’t have an official price tag yet. February 20th is the deadline to introduce new legislation.
The governor’s proposal isn’t particularly appealing to insurance policy expert Dave Jones, a former California insurance commissioner and the current director at UC Berkeley’s Climate Risk Initiative at Center for Law Energy & the Environment.
“Creating some new state taxpayer-funded insurance scheme doesn't change the rising risk associated with climate change and the rising losses associated with climate change,” Jones said.
He’s never seen something quite like this aside from nationwide programs such as the National Flood Insurance Program and the Federal crop insurance program.
Alternatively, Jones is convinced that insurers of last resort – like New Mexico’s Fair Access to Insurance Requirements or FAIR – are the key to curbing the insurance crisis. These pricier policies are only offered to people who cannot find coverage elsewhere.
“That's a very sustainable mechanism, it's one that provides insurance for people that the private market is not providing,” Jones said. “And I think we're just going to see more people pushed into FAIR plans, and we're going to need to look for ways to shore up FAIR plans.”
One tweak could be a federal reinsurance subsidy program to offset the mounting costs of covering consumers.
As it so happens, New Mexico lawmakers are working on FAIR reform this session. The proposal seeks an additional $50 million for the FAIR plan and mandates a change in the plan board to include public members, not just private insurers, and substantially increase the maximum limit of financial coverage.
Currently, insurers within the state are on the hook for when New Mexico’s FAIR plan runs out of cash. New language in the bill would allow companies to immediately pass on costs to their policyholders in the form of a surcharge, a fairly uncommon policy choice among the nation’s 34 existing FAIR plans.
Economic feasibility is a clear issue with FAIR plans, which rely on hefty cash injections to stay afloat. For example, California, as a result of claims from the recent Los Angeles wildfires, is dealing with a significant strain on its FAIR resources.
There’s also wildfire preparedness and readiness to think about.
For rural portions of the state, volunteer firefighters are the only thing standing between a blaze and homes, especially in the first 24 hours.
Raphael D’Amato has almost two decades of firefighting experience, 13 as a volunteer in San Miguel County. He’s been advocating for simple changes to help boost the steady decline of volunteers in recent years, like a per diem for gas.
“We would attract more people on the ground if we could give them a few bucks for everything they do, instead of out of pocket,” D’Amato said.
D’Amato also said requiring volunteers to complete an interagency “red card” certification for wildland firefighting could open up pay opportunities through the state.
“So when they get called out for a little brush fire and it ends up being a two week thing, they could pay for it,” D’Amato said. “That would be really helpful.”
These are just a few of many changes that UC Berkeley’s Dave Jones agrees can help entice insurers to lower their premiums.
Meanwhile, a wildfire preparedness bill making its way through the legislature would provide grants to “harden” homes from fire. While a good start, Jones said these mitigation efforts don’t have much impact.
“Unfortunately, despite doing all those things, you don't get credit for it in the models the insurance companies use to decide whether to write or renew your insurance,” Jones said. “And that’s outrageous.”
So, as climate change continues to exacerbate wildfire risk, tempting insurers to increase premiums or drop coverage, Jones worries about a quickly approaching “uninsurable” future without thoughtful and quick policy change.
“Let's work with what we have, and let's try to bolster that, as opposed to supplanting it with something that could very well make things worse,” Jones said.
