Report 22-20 | November 2022
The State Life Insurance Fund (SLIF) was created in 1911 to provide low-cost individual life insurance to Wisconsin residents. It is self-funded through premiums and investment earnings and is administered by the Office of the Commissioner of Insurance (OCI). We conducted this statutorily required financial audit of SLIF by auditing its financial statements in accordance with applicable government auditing standards, issuing our auditor’s opinion, reviewing internal controls, and issuing our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters.
SLIF prepares its financial statements in accordance with financial reporting requirements prescribed by the Wisconsin Commissioner of Insurance, but not in accordance with generally accepted accounting principles. The Commissioner of Insurance prescribes that SLIF follow the statutory accounting practices established by the National Association of Insurance Commissioners. We found SLIF’s financial statements to be fairly presented in accordance with the financial reporting requirements prescribed by the Wisconsin Commissioner of Insurance. Therefore, we provided unmodified opinions on SLIF’s financial statements prepared on a regulatory basis. We also provided adverse opinions on SLIF’s financial statements based on generally accepted accounting principles.
SLIF operates under specific statutory restrictions, including a prohibition on employing commissioned agents and a limitation on coverage of $10,000 for any insured individual. By statute, OCI is not allowed to advertise life insurance offered by SLIF. The number of policies has been declining since December 31, 1996, when there were 31,361 policies. As of December 31, 2021, there were 22,225 polices. The amount of insurance in force has also declined and was $174.0 million as of December 31, 2021.
Statutes specify that, to the extent practicable, the ratio of SLIF’s surplus to its assets is to be between 7.0 percent and 10.0 percent. Periodically, OCI staff will assess whether the dividend scale, which determines the dividends to pay to the various types of policyholders, needs to be adjusted to maintain the surplus-to-assets ratio within the statutorily specified range. The dividend scale was adjusted as of January 1, 2019, yet the surplus-to-assets ratio has steadily increased and was 9.3 percent as of December 31, 2021.