Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Leavell

ORIGINAL DATE

LAST UPDATED

2/7/07

HB

SHORT TITLE Property and Casualty Insurance Rate Forms

SB 483

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Regulation Commission (PRC)

SUMMARY

Synopsis of Bill

Senate Bill 438 makes significant changes to the regulation of property of casualty insurance.

This bill intends to eliminate rate regulation of property and casualty insurance and rely on

market forces for rate setting. The Superintendent of Insurance would no longer be required to

approve rate changes. The bill would require the Superintendent to promulgate automobile and

homeowners insurance premium comparison guides for consumers. It would require insurance

companies to alert consumers of their right to obtain a detailed description of the reasons why

their automobile or homeowners insurance premiums have changed upon policy renewal. It

would give the superintendent the authority to require automobile and homeowners insurers to

file their underwriting guidelines and to cease underwriting practices that are vague or unfairly

discriminatory. The bill increases the fines levied against insurance companies that violate the

Insurance Rate Regulation Law.

FISCAL IMPLICATIONS

The PRC did not identify any fiscal impact from this legislation. However, the bill increases

maximum penalties for not complying with the act from $50 to $10,000 and for willful violation

from $500 to $25,000.

Senate Bill 483 – Page

2

SIGNIFICANT ISSUES

The bill alters the Insurance Division role in regulation of the property and casualty insurance.

Instead of rate setting, Insurance Division would be required to provide information on insurance

rates to consumers. Property and casualty insurers would be required file rates with the division

but the rates would not be subject to regulation. However, the bill maintains prior approval

requirements for rates in insurance markets that the Superintendent determines are not

adequately competitive as well as for key ingredients of workers compensation insurance rates.

ADMINISTRATIVE IMPLICATIONS

PRC finds that this bill would free up the Insurance Division’s limited actuarial resources to

focus on regulating rates for those types of insurance where adequate competition does not exist,

on creating and maintaining premium comparison guides for consumers, and on monitoring

levels of competition in the New Mexico insurance marketplace.

BE/nt