Colorado’s governor is set to sign a first-of-its-kind reform bill mandating property insurers account for wildfire risk mitigation in both their coverage decisions and pricing models.
Some in New Mexico are looking at the legislation as an example that could work here as well. Lawmakers did pass a bill in this year’s legislative session to provide grants helping property owners harden homes against wildfire. But they did not make much progress tackling the dilemma of rising insurance costs.
There are many ways for homeowners to reduce their chances of losing their property to fire. Those include simply landscaping around a property to reduce flammable vegetation or upgrading roofing and wall building materials.
These kinds of improvements can, with the help of the state, severely curtail risk and tamp down a property’s insurance risk.
Unlike in Colorado, insurers elsewhere in the U.S. aren’t required to consider those upgrades when writing policies.
“We're paying state taxes to do this sort of work, and yet you get no credit for it in the computer models the insurers use to assign a risk score to your home or business property,” said 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.
“That is outrageous and needs to change,” he said.
The Colorado bill would be the first in the nation to change this – requiring insurers to include mitigation efforts in both pricing models and underwriting decisions.
And experts think New Mexico would greatly benefit from adopting similar policies.
“So that people aren't so blindsided by insurance policy changes,” said Jordan Haedtler, a climate financial policy consultant who testified in support of the Colorado bill. “Especially if they're making a bunch of expensive renovations that are meant to make their insurance policy more sustainable and affordable.”
Dave Jones agrees.
“That would make a big difference, because it would be a path to keep some private insurance in the market, and it would also provide some affirmation to homeowners and communities.” Jones said. “We want them to spend more to make a difference in the availability of insurance right now.”
Insurance companies use “catastrophe models” to estimate the likelihood of disasters, like wildfires or floods for a property, then assign a risk score that helps determine premium pricing.
The Colorado bill requires insurers disclose a homeowner’s exact wildfire risk score, explain the factors behind it, and give consumers a chance to challenge that rating.
The insurance industry initially opposed the bill, Haedtler said, but eventually softened their stance because regulators wouldn’t have the authority to force price reductions.
“I think New Mexico made a very significant first step towards passing something like this by enacting the Wildfire Prepared Act in the 2025 legislative session,” Haedtler said.
The bipartisan New Mexico bill, which was signed by Gov. Michelle Lujan Grisham on April 7th, establishes a task force to develop standards for “defensible space” around homes in addition to setting aside $20 million for individual grants.
While there are still some questions on the legality of distributing public grant money to private individuals, lawmakers overwhelmingly supported the idea. Rep. Matthew McQueen (D-Santa Fe) was the only lawmaker to vote against the legislation across both chambers, citing this legal grey area.
A tangentially related bill aimed at reforming the state’s Fair Access to Insurance Requirements (FAIR) Plan – or “insurer of last resort” – fizzled in the House Judiciary Committee despite widespread support. FAIR Plans are typically very expensive and offer limited coverage.
The full New Mexico Legislature will not meet again until next year’s short, 30-day budgetary session.
Though, Gov. Michelle Lujan Grisham could call a special session at any time for any reason. But only issues specified in the governor's proclamation can be addressed.
During her 2025 State of the State address, Lujan Grisham Gov. Michelle proposed a state-sponsored fire insurance program to help New Mexicans secure affordable fire coverage. She wasn’t able to secure a sponsor for the idea, according to a spokesperson.
