New Mexico struggles to offer fire insurance as working class citizens pay the price amid climate change


Manuel and Marcy Silva combed through the charred debris of what used to be their home, looking for salvageable fragments from the largest wildfire in New Mexico history.

Manuel found two of his high school wrestling medals. The bedroom furniture that Marcy’s grandfather built as a gift, her wedding dress and her children’s toys are missing.

The family was just one payment short of owning their single-width mobile home, and like many other northern New Mexico residents whose homes were in the path of the flames, the Silvas had no insurance.

After burning more than 530 square miles (1,373 square kilometers) of the foothills of the Rocky Mountains, the government-ignited wildfire is helping to shed light on what New Mexico officials are calling a crisis, where coverage of insurance for everything from homes to workers compensation. at premiums that often make it unaffordable for many in the poverty-stricken state.

New Mexico officials are banking on a California insurer moving to the state and selling policies to low-income and underserved areas. But the multibillion-dollar merger involving California Insurance Co. has been overshadowed by pay to play accusations and remains stuck in court.

On Thursday, a California judge stopped short of granting New Mexico’s request to intervene in the case, but cleared the way for the state to weigh in on a proposed plan to resolve ongoing guardianship proceedings.

New Mexico attorneys argued during the hearing that the need for more insurers has intensified since the proceedings began more than three years ago. They noted that companies have difficulty obtaining adequate workers’ compensation coverage.

New Mexico Attorney General Hector Balderas told The Associated Press he is concerned that families may not be able to insure their homes as the risk of wildfires and subsequent flooding increases amid climate change.

“I am very concerned that, in the future, these natural disasters are going to increase premiums or we are going to be in a deeper crisis like the one in Florida, where insurance providers do not want to come to New Mexico because it is a very challenging market. . to insure,” he said.

Wildfires have burned about 11,000 square miles (28,490 square kilometers) in the US so far this year, slightly exceeding the 10-year average. The season started early in New Mexico when the The US Forest Service failed to account for the ongoing drought and measures intended to lessen fire danger were whipped out of control by high winds.

The federal government agreed to channel $2.5 billion in recovery funds to New Mexico in what members of the state’s congressional delegation described as a “down payment” on what would be a decades-long recovery.

While New Mexico officials welcomed the aid money, residents of remote villages scattered across the mountains say they have had difficulty filing claims with federal emergency managers and that there is no system in place to quickly get the help they need. the families.

Mike Maese has sandbaged his house and there is a ladder nearby so he and his family can escape to the roof in case there is more flooding after the fire.

“I’m not the kind of person who’s going to ask for help or cry about this, that and the other, but I’m tired,” he said, lamenting that he has been forced to take time away from his barber business to clean. pick up debris and trucks in water to flush toilets and take showers now that the well on his property has been ruined.

You tried to get insurance years ago, but it would have cost you more than your property could have insured.

The Silvas said the cost of insuring a single-width mobile home made in the 1970s was insurmountable. And the house used a wood stove for heat, like many houses in rural New Mexico.

Marcy Silva works in information technology at New Mexico Highlands, and Manuel is employed by the San Miguel County Department of Public Works. They would have opted for insurance if it was affordable.

For now, they and their two young children live with Manuel’s parents. They hope to buy another mobile home, but acknowledged that the historical pace of inflation is not helping and that more work needs to be done to restore their property.

“The best way I can explain it is that it’s been like a never-ending nightmare that just seems to get worse and worse,” Manuel said.

California Insurance Co. officials have assured Gov. Michelle Lujan Grisham and state insurance regulators that they will fill the policy gap in New Mexico.

Consumer Watchdog, a Los Angeles-based progressive advocacy group, said New Mexico regulators should be cautious about allowing CIC to operate in the state. The group sued California regulators in 2020 over emails and other communications after reports surfaced that California Insurance Commissioner Ricardo Lara accepted political donations from insurers, despite promising during his 2018 campaign. I would not do it.

Lara at the time apologized for accepting political contributions from people associated with Applied Underwriters, CIC’s parent company, and other insurers. She returned more than $80,000 to insurers and other donors with business before state regulators.

Associates with Applied Underwriters included lobbyist Eric Serna, who retired in 2006 as New Mexico’s insurance superintendent after state officials suspended him over conflict of interest issues.

Lara came under scrutiny again this year when Consumer Watchdog raised new concerns about a series of transactions involving donations from the insurance industry and independent groups working to support her re-election.

Jerry Flanagan, director of litigation for the consumer group, said the situation facing California and New Mexico homeowners when it comes to wildfires is heartbreaking. Statistics compiled by the insurance industry show that about 15% of properties in the two states are at risk from wildfires. Only Montana, Idaho, and Colorado have higher percentages.

“Unfortunately, what insurance companies want from political officials is often bad for consumers,” Flanagan said. “So it’s kind of like going out of the frying pan into a fire situation for New Mexico consumers because they need some coverage, but the history with California Insurance Co. is that they can’t be trusted.”

The company disputes the allegations, calling them baseless and saying that all insurance companies in California engage in some form of lobbying.

Jeffrey Silver, the company’s general counsel, wrote in an email that CIC has provided coverage throughout California and that the number of complaints from policyholders and claimants over the years has been in the single digits compared to the tens of thousands. policies issued and millions of people covered.

Silver said it’s time for California to release its “freehold” and clear the way for the company to do business in New Mexico, where he said it would still be subject to regulatory oversight and regular reviews.

Balderas, a Democrat who will finish his last term at the end of the year, said what appeals to him is that the CIC would move its executives and capital to New Mexico once the guardianship is resolved and would be subject to state regulation and taxes.

“I think a business can be held more accountable if it is based and provides services in the state,” he said.

Lawyers expect a resolution next year, but that leaves people like Maese in a difficult impasse.

Describing life without basic services and the potential devastation that comes with every rainstorm, Maese paused for a long time, trying not to choke. He said that he and his neighbors are hidden and forgotten and that it has been difficult to cope with all the devastation.

“It’s something that goes on over and over again,” he said. “I don’t see light at the end of the tunnel, but there is hope.”

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