Rhode Island Joint Reinsurance Association (RIJRA)

The Rhode Island Joint Reinsurance Association (RIJRA) is Rhode Island's residual market mechanism for providing windstorm and hurricane coverage to coastal properties that cannot obtain coverage in the voluntary insurance market.

RIJRA History and Purpose

Establishment of RIJRA

Created in 1994: RIJRA was established by the Rhode Island General Assembly in 1994 following Hurricane Bob (1991), which caused significant damage and made hurricane insurance difficult to obtain for coastal properties.

Legislative Authority:

• R.I. Gen. Laws § 27-35 - Rhode Island Joint Reinsurance Association Act
• Creates mandatory participation by all admitted insurers
• Establishes RIJRA governance and operations
• Sets coverage limits and eligibility requirements

RIJRA Purpose

Mission: Provide a last-resort source of windstorm and hurricane coverage for Rhode Island coastal properties that:

• Cannot obtain coverage in the voluntary market
• Are located in high-risk coastal areas
• Face unaffordable premiums in voluntary market
• Have been declined by multiple insurers

Market of Last Resort: RIJRA is designed as a residual market—not a primary market:

• Applicants must be declined by voluntary market first
• RIJRA premiums are actuarially sound (not subsidized)
• Coverage is basic and limited (not comprehensive)
• Goal is to provide essential windstorm protection

RIJRA Structure and Governance

Membership

Mandatory Participation: All insurance companies licensed to write property insurance in Rhode Island must be members of RIJRA.

Member Insurers:

• Admitted carriers: Licensed by Rhode Island DBR
• Writing property coverage: Homeowners, dwelling, commercial property
• Assessment-based: Members assessed to cover RIJRA losses
• No opt-out: Participation is mandatory by law

Member Responsibilities:

• Pay assessments to cover RIJRA losses
• Serve on RIJRA board and committees
• Support RIJRA operations
• Write primary coverage with RIJRA providing excess coverage

RIJRA Board of Directors

Governance: RIJRA is governed by a Board of Directors composed of:

• Insurer representatives: Elected by member companies
• Public members: Appointed by Rhode Island Insurance Superintendent
• Superintendent oversight: DBR Insurance Division oversees RIJRA

Board Duties:

• Set RIJRA rates and underwriting guidelines
• Approve coverage terms and limits
• Manage RIJRA finances and reserves
• Report to Superintendent and General Assembly

RIJRA Eligibility and Coverage Territory

Geographic Eligibility

Coastal Properties Within 2 Miles: RIJRA covers properties located within 2 miles of the Rhode Island coastline:

Coastline Defined:

• Atlantic Ocean: Southern Rhode Island coast
• Narragansett Bay: Entire bay and tributaries
• Block Island Sound: Waters south of mainland
• Rhode Island Sound: Western coastal waters

Measuring the 2-Mile Zone: The 2-mile distance is measured from:

• Mean high tide line of Atlantic Ocean
• Shoreline of Narragansett Bay and tributaries
• Straight-line distance from property to nearest point on coastline

Properties Outside 2-Mile Zone: Properties more than 2 miles from the coast are NOT eligible for RIJRA coverage. They must obtain coverage in the voluntary market.

Exam Tip: RIJRA covers properties within 2 miles of the Rhode Island coast (Atlantic Ocean and Narragansett Bay). Properties beyond 2 miles are not eligible for RIJRA.

Property Type Eligibility

Eligible Properties:

Ineligible Properties:

• Properties with available voluntary market coverage at reasonable rates
• Properties that have not been declined by voluntary market
• Properties outside the 2-mile coastal zone
• Properties with excessive claims history or poor condition

Declination Requirement

Must Be Declined First: To qualify for RIJRA coverage, property owners must:

1. Apply to voluntary market: Seek coverage from admitted insurers
2. Receive declinations: Be declined by at least one insurer
3. Demonstrate unavailability: Show voluntary market coverage is unavailable or unaffordable
4. Apply to RIJRA: Then eligible to apply for RIJRA coverage

Voluntary Market Priority: Rhode Island law prioritizes the voluntary insurance market. RIJRA is truly a last resort only when the voluntary market is unavailable.

RIJRA Coverage

Windstorm and Hurricane Coverage

What RIJRA Covers: RIJRA provides coverage for windstorm and hurricane damage to covered properties:

Covered Perils:

• Hurricane wind damage: Damage from hurricane-force winds (74+ mph)
• Tropical storm winds: Wind damage from tropical storms
• Other windstorms: Nor'easters, severe storms, high winds
• Wind-driven rain: Water damage resulting from wind damage to structure

What RIJRA Does NOT Cover:

RIJRA Coverage Structure

How RIJRA Works: RIJRA operates as an excess coverage layer above a primary policy:

Coverage Layers:

1. Primary Policy: Homeowners or dwelling policy covers non-wind perils (fire, theft, etc.)
2. RIJRA Policy: Provides windstorm/hurricane coverage as excess or standalone
3. Deductibles: RIJRA has separate deductibles (often percentage-based)

Example Structure:

• Primary Homeowners Policy: $400,000 with wind excluded
• RIJRA Windstorm Policy: $400,000 windstorm coverage
• Combined Protection: Full coverage for all perils

RIJRA Coverage Limits

Maximum Coverage:

• Residential Properties: Up to $2,000,000 per property
• Commercial Properties: Varies based on property value and risk

Coverage A (Dwelling): Maximum $2 million for structure replacement

Coverage B (Other Structures): Typically 10% of Coverage A ($200,000 if Coverage A is $2M)

No Contents Coverage: RIJRA does not provide personal property (contents) coverage. Property owners must obtain contents coverage through voluntary market or have no contents coverage.

Exam Tip: RIJRA maximum coverage is $2 million for residential properties. RIJRA covers the structure (windstorm/hurricane damage) but does NOT cover personal property (contents).

RIJRA Rates and Deductibles

RIJRA Rating

Actuarially Sound Rates: RIJRA rates are actuarially sound, meaning they reflect the true risk of loss. RIJRA is not a subsidized program.

Rating Factors:

• Distance from coast: Closer properties = higher premiums
• Construction type: Frame vs. masonry
• Age of structure: Older homes may pay more
• Elevation: Higher elevation = lower risk
• Prior losses: Claims history affects rates
• Coverage amount: Higher limits = higher premiums
• Deductible selected: Higher deductible = lower premium

RIJRA Rate Approval: RIJRA rates must be approved by the Rhode Island Superintendent of Insurance. Rates are filed and reviewed like any other insurance rates.

RIJRA Deductibles

High Deductibles: RIJRA policies typically have higher deductibles than voluntary market policies because of the high-risk nature:

Typical RIJRA Deductibles:

• 2% of Coverage A: Common deductible ($8,000 on $400,000 home)
• 5% of Coverage A: Higher deductible for lower premiums ($20,000 on $400,000 home)
• Flat dollar amounts: $5,000, $10,000, $25,000 options

Percentage-Based Deductibles: Most RIJRA policies use percentage-based deductibles (2% or 5% of Coverage A) rather than flat dollar amounts because of the high-value coastal properties insured.

RIJRA Financial Structure

Assessment System

How RIJRA is Funded: RIJRA operates through an assessment system where member insurers are assessed to cover RIJRA losses:

Assessment Process:

1. RIJRA Collects Premiums: RIJRA charges premiums to policyholders
2. Claims Paid: RIJRA pays windstorm claims from premium income
3. Deficit Occurs: If claims exceed premiums, RIJRA has deficit
4. Assess Members: RIJRA assesses member insurers to cover deficit
5. Insurers Pay: Member insurers pay assessments
6. Recoup Assessments: Insurers may recoup assessments through surcharges on all Rhode Island property policies

Assessment Caps and Limits

Member Insurer Assessments: Each member insurer's assessment is based on their market share of Rhode Island property insurance premiums:

Market Share Assessment:

• If insurer writes 10% of Rhode Island property premiums, they pay 10% of RIJRA assessments
• Larger insurers pay proportionally more
• Smaller insurers pay proportionally less

Recoupment: Member insurers may recoup (recover) assessments by:

• Adding surcharge to Rhode Island property policies
• Spreading cost across all Rhode Island policyholders
• Limited by Rhode Island law and DBR approval

Exam Tip: RIJRA is funded through assessments on member insurers based on their market share. Insurers may recoup these assessments through surcharges on Rhode Island property insurance policyholders.

RIJRA Application Process

Obtaining RIJRA Coverage

Step-by-Step Process:

1. Apply to Voluntary Market

• Contact admitted insurers for quotes
• Seek coverage from multiple carriers
• Obtain written declinations

2. Demonstrate Declination

• Provide proof of declinations to agent/broker
• Show voluntary market unavailable or unaffordable
• Document efforts to obtain voluntary coverage

3. Contact RIJRA Servicing Carrier

• RIJRA uses servicing carriers (member insurers) to process policies
• Agent/broker contacts servicing carrier on behalf of applicant
• Servicing carrier handles underwriting and policy issuance

4. Complete RIJRA Application

• Provide property information (age, construction, value)
• Submit photos of property
• Disclose prior losses
• Select coverage amounts and deductibles

5. Underwriting Review

• RIJRA servicing carrier reviews application
• May require property inspection
• Verifies eligibility and risk factors

6. Policy Issuance

• If approved, RIJRA policy issued
• Premium quoted and payment required
• Coverage effective upon payment

RIJRA Servicing Carriers

Agent Access: Insurance producers do not directly place coverage with RIJRA. They work through servicing carriers:

Servicing Carrier Role:

• Process RIJRA applications
• Issue RIJRA policies
• Handle premium collection
• Process claims
• Act as liaison between RIJRA and policyholders

Producer Responsibilities:

• Educate clients about RIJRA
• Assist with voluntary market declinations
• Submit applications to servicing carriers
• Explain coverage and deductibles
• Service policies and assist with claims

RIJRA Claims Process

Filing a RIJRA Claim

Claim Procedure:

1. Storm Event: Hurricane or windstorm damages property
2. Notify Insurer: Contact RIJRA servicing carrier immediately
3. Document Damage: Take photos/video of damage
4. Mitigate Further Damage: Make temporary repairs to prevent worsening
5. Adjuster Inspection: RIJRA adjuster inspects property
6. Claim Settlement: RIJRA pays covered windstorm damage minus deductible

What RIJRA Pays:

• Structural damage from wind: Roof, siding, windows, doors
• Wind-driven rain damage: Water entering through wind-damaged openings
• Debris removal: Removing trees, debris from wind damage
• Temporary repairs: Emergency mitigation to prevent further damage

What RIJRA Does Not Pay:

• Flood damage: Covered by separate NFIP flood insurance
• Pre-existing damage: Damage that existed before storm
• Maintenance issues: Wear and tear, deferred maintenance
• Non-wind damage: Fire, theft, vandalism (covered by primary policy)

RIJRA and Flood Insurance

Flood vs. Wind Determination: One of the most contentious issues in coastal property claims is determining whether damage was caused by wind (RIJRA covers) or flood (NFIP covers):

Common Scenarios:

Anti-Concurrent Causation: Rhode Island follows anti-concurrent causation principles. If wind and flood both cause damage, losses must be apportioned between wind (RIJRA) and flood (NFIP).

Exam Tip: Determining whether damage is from wind (RIJRA) or flood (NFIP) is critical. Wind-driven rain entering through wind-damaged openings is covered by RIJRA. Water entering through non-damaged openings (flooding) is covered by NFIP.

RIJRA Alternatives and Voluntary Market

Return to Voluntary Market

Encouraging Voluntary Market: Rhode Island encourages property owners to obtain coverage in the voluntary market when possible:

Transition Incentives:

• Market Assistance Programs: Some insurers offer programs for coastal properties
• Mitigation Discounts: Installing hurricane protection may make voluntary market coverage available
• Improved Property: Renovations and upgrades may improve insurability

When to Leave RIJRA:

• Voluntary market coverage becomes available at reasonable rates
• Property improvements reduce risk profile
• Market conditions improve
• Insurer offers competitive quote

Working with RIJRA

Producer Best Practices:

• Educate Clients: Explain RIJRA as last resort
• Seek Voluntary Market First: Always try voluntary market before RIJRA
• Explain Limitations: RIJRA has higher deductibles and limited coverage
• Recommend Flood Insurance: RIJRA does not cover flood—clients need NFIP
• Annual Review: Check if voluntary market options available each renewal
• Mitigation Advice: Recommend hurricane protection for better coverage options

Exam Tip: Producers should always seek voluntary market coverage first before placing clients with RIJRA. RIJRA is a residual market of last resort with higher deductibles and limited coverage.