Regulation of Charitable Gift Annuities
Degree of Regulation:
Issuance of charitable gift annuities is regulated under Wisconsin State Code Sections 615.03. through 615.15.
In order to issue gift annuities in the state, a charity must meet the following regulatory requirements:
- have been in continuous operation for at least 10 years.
- obtain a certificate of authority from the Office of Commissioner of Insurance
- maintain gift annuity reserves, invested in accordance with the prudent investor standard
- submit an annual filing to the state
Actions Required for Exemption:
A charity must apply to the Wisconsin Office of the Commissioner of Insurance for a certificate of authority prior to issuance of any gift annuity in the state.
There is a $200 filing fee ($100 due at the time of application and $100 due at the time the certificate is granted.)
Disclosure and Agreement Content Requirements:
Although no specific disclosure language is mandated by Wisconsin law or regulations, the Office of the Commissioner of Insurance recommends inclusion of such language. The wording should be placed in a separate paragraph, in type no smaller than that used in the agreement generally.
Suggested Language for State Disclosure: “This qualified charitable Gift Annuity is insurance under the laws of the State of Wisconsin and [Name of Charity], as its issuer, is subject to regulation by Wisconsin's Office of the Commissioner of Insurance with respect to its gift annuity program. However, this qualified charitable gift annuity is not protected by the Wisconsin Insurance Security Fund or any other insurance guaranty association. All of the unrestricted assets of [Name of Charity] stand behind this promise to pay.”
The segregated fund must maintain assets at least equal to the sum of a charity’s reserves on its outstanding gift annuity agreements plus a surplus of the greater of: (i) $100,000; or (ii) 10% of its reserves. The reserves are to be calculated in accordance with prescribed mortality tables and discount rates. A deduction in reserves may be made for any portion of the annuity risk that is reinsured by an authorized insurer.
Assets in the reserve fund are to be invested in accordance with the prudent investor standard, under Chapter 881 (Trust Fund Investments). Note: Prior to the passage of 2009 Wisconsin Act 33, which was effective August 4, 2009, Wisconsin imposed specific restrictions on the investment of gift annuity reserves.
An annual report on the segregated reserve fund is due by March 1 each year after a certificate of authority is obtained. While generally a verification by an actuary of the reserve calculation had to accompany the report, the 2013 annual statement form was modified to eliminate the need for an actuary’s signature.
There is a $50 annual renewal fee.
Enforcement may be made through summary order, resulting in a revocation of the permit.
Links to State Regulations Pages:
Wisconsin Insurance Department Contact Information:
Bureau of Financial Analysis and Examinations
Office of the Commissioner of Insurance
P.O. Box 7873
Madison, WI 53707-7873