Wildfire Risks Drive Surge in New Mexico Insurance Nonrenewals

Insurance nonrenewals in New Mexico rose from just over 1,900 in 2022 to more than 6,200 in 2025, as increasing wildfire and flood risks make more properties uninsurable in the open market.

New Mexico Superintendent of Insurance Alice Kane stated that her office is tracking a growing trend of cancellations and nonrenewals driven by the increased risk of natural disasters. According to Kane, the state’s position in a wildfire-prone area and ongoing drought conditions have led insurance providers to reduce their risk exposure.

The impact varies by region, with Rio Arriba County experiencing a 167% increase in nonrenewals between 2024 and 2025. Lincoln County saw an 18% increase during the same period.

The FAIR Plan and Market Alternatives

For residents who are refused coverage in the open market, the state offers the FAIR Plan. Kane noted that the program is designed to provide coverage specifically when the open market is unavailable and is not intended to compete with private insurers.

The state has expanded FAIR Plan coverage over the last year. The program currently provides cash value policies with limits up to $750,000 for residential properties and $2 million for commercial properties.

The plan is considered critical for thousands of residents living near flood and fire zones, including those in Ruidoso. Kane described the landscape in some affected areas as absolutely black with no vegetation, which leaves the land unable to hold water when rains occur.

Legislative and Economic Impacts

The insurance crisis is creating broader economic challenges. According to a presentation by the Office of the Superintendent of Insurance and the Energy, Minerals and Natural Resources Department, the loss of insurance can stifle economic development and create difficulties with lenders, who require insurance for mortgages.

In response to the crisis, U.S. Senator Martin Heinrich (D-N.M.) and Senator Tim Sheehy (R-Mont.) introduced the Wildfire Insurance Coverage Study Act on July 25, 2025. The legislation requires the Government Accountability Office to study how destructive wildfires affect the ability of homeowners to access insurance.

Senator Heinrich indicated that the legislation aims to address skyrocketing premiums and policy cancellations, noting that the crisis affects one in eight properties in New Mexico. He referenced a 2023 report he authored as chairman of the Joint Economic Committee, which estimated that wildfires cost the United States between $394 billion and $893 billion annually.

Environmental Drivers of Risk

The escalation in insurance cancellations follows a period of record wildfire activity in the state. In 2022, New Mexico experienced its two largest wildfires in history: the Black fire and the Hermits Peak-Calf Canyon fire, both of which burned more than 300,000 acres.

More recent activity has continued to impact the region. The Salt and South Fork fires near Ruidoso destroyed approximately 1,400 structures in 2025.

Senator Sheehy noted that the issue extends beyond New Mexico, stating that one-third of Americans live in areas prone to wildfires.