The Importance of Secure and Auditable Proxy Voting

Unlike traditional insurance companies, where shareholders have the power, policyholders have a direct say in how mutual insurance companies operate. Voting is crucial to running your organization, but some policyholders aren’t able to participate in annual elections.

Proxy voting is a common way for mutual insurance companies to get the participation they need without overwhelming policyholders. However, proxies come with safety and security concerns. Overall satisfaction in democracy is at a record low, so it’s never been more important for insurance companies to run transparent, accurate, and secure elections.

Election security and auditability are always a concern for mutual insurance companies, but these aren’t insurmountable challenges. Consult this guide to better understand the role of proxies in annual elections and set up secure voting in a hybrid environment.

 

How Proxy Voting Works for Mutual Insurance Companies

In a mutual insurance company, policyholders are also company owners. They get a say in the company’s direction and governance through the voting process. These people aren’t just customers—they’re active participants who have the power to shape the company’s strategic direction.

Proxy voting makes it possible for policyholders to still vote even if they can’t attend the annual meeting. In a proxy vote, the company picks someone to vote on the policyholders’ behalf so they still have a say in the decision-making process.

Proxy votes happen in four steps:

1. Nominations: More often than not, a nominating committee will suggest candidates for the board of directors. Some organizations also allow policyholders to nominate candidates, but this depends on the company bylaws.
2. Voting: Before the vote, your organization sends proxy materials to policyholders. These usually include information on the issues on the ballot, candidate summaries, and instructions for proxy voting. If candidates don’t want to vote directly, they can appoint a proxy (usually the board chair) to vote on their behalf at the annual meeting. If they don’t want to use a proxy, policyholders can submit votes online or by mail.
3. Annual meeting: Policyholders can attend the annual meeting to discuss the election, ask questions, and request reports on company performance. Some mutual insurance companies require policyholders to submit requests or agenda items before the meeting.
4. Results: Many mutual insurance companies announce election results during the annual meeting or shortly afterward. Companies should also keep detailed records on the voting process and outcomes, both for legal reasons and for future reference.

It may sound more complex than a traditional vote, but proxies help mutual insurance companies reach a quorum more quickly, streamlining operations without burdening policyholders.

The Importance of Secure Proxy Voting

Proxy voting simplifies the election process for mutual insurance companies, but it isn’t without its challenges. Security is always a concern for any election, and this is no different. Organizations must take election security seriously for a variety of reasons.

Ensure Data Integrity and Confidentiality

Data integrity ensures policyholders’ votes are recorded correctly and can’t be altered. Integrity is everything in voting because it confirms that the election results actually reflect the will of your policyholders.

Policyholders also need to trust that you’ll keep their personal information safe and that their voting choices are confidential. Every election gives malicious actors an opportunity to steal data or manipulate results, so treat data protection and confidentiality with the utmost seriousness. Unfortunately, annual elections can tempt bad actors to attempt to steal data or tamper with results. Data protection and voter confidentiality must be top priorities to safeguard the election process. Partnering with a professional election services provider offers a strong defense against these types of threats.

Prevent Duplicate Votes and Fraud

A secure proxy voting setup ensures that each policyholder only gets one vote. It prevents accidental (or purposeful) duplicate votes, which will skew your results and undermine the election. Secure elections also prevent vote manipulation and unauthorized access, keeping you safe and compliant every step of the way.

Authenticate Votes

Proxy voting systems should verify voter identities using authentication methods. Multi-factor authentication (MFA), ID codes, or strict data validation protocols to confirm that only eligible policyholders can vote.

Best Practices for Proxy Voting

Proxy voting gives mutual insurance companies the necessary votes to move forward without inconveniencing policyholders. However, these elections aren’t without their challenges. Follow these five best practices to run secure, auditable proxy votes that keep you compliant and preserve policyholder confidence.

1. Follow Basic Data Protection Best Practices

You must follow common sense data protection rules when you gather user data of any kind. You’re likely following some of these rules already, but data protection is essential for an audit-proof proxy voting setup.

At a minimum, ensure your proxy voting includes:

• Encryption both in transit and at rest
• Access controls that offer strict, privileged-based access to authorized users who can access the voting system and results
• Physical security for election servers and other hardware, including 24/7 monitoring, locks, and access logs
• Audit logs that track and monitor all votes cast or proxies received online or by mail
• Data backups and co-location

Security is a lot to handle internally, though. Instead of managing everything yourself, use a proxy voting solution that’s compliant out of the box. Survey & Ballot Systems has over 30 years of election experience to keep your proxy votes secure. We’re SOC 2 compliant, offer 24/7 monitoring and response, and follow best-in-class disaster recovery plans. SBS also relies on third-party security audits and uses Symantec® TLS industry-leading encryption and authentication to lock down your election data.

2. Get Buy-in From Both the Leadership Team and Policyholders

You might want to implement proxy voting, but it can’t become a reality unless everyone favors a different system. First, leaders within your insurance company need to approve the change. That might require taking your company from public to private, which is no small decision. Proxies could also come with liability issues, affecting everything from insurance to contracts. Work with your internal leadership team to iron out all the details before moving forward.

Next, make sure your policyholders approve of voting by proxy. Most will be in favor if they understand the time-saving benefits of proxy voting, especially if you offer hybrid voting options. You may need to launch an educational marketing campaign to gain enough support.

3. Create Clear Proxy Voting Policies

Clear policies and procedures are the best way to gain policyholder confidence and ensure regulatory compliance.

Write these policies in clear language that defines:

• How nominations work
• How to cast votes
• Who will be the proxy
• When and how votes are reported

Make these policies open and available to your policyholders. The easier it is to find resources about proxy voting, the more likely they are to trust the process.

It’s also important to regularly review your voting policies. New regulations may crop up over time, or you may want to change your approach to corporate governance. If there’s ever a change in policy, be sure to email or alert policyholders about the changes.

4. Train Your Team

Did you know that 88% of data breaches result from human error? Hackers use tricky social engineering scams to persuade employees to open up access to voting systems, giving malicious attackers the keys to the kingdom.

While employees need to understand the ins and outs of the proxy voting system, they also need regular cybersecurity training to keep elections free from outside interference. Train employees on the basics of social engineering attacks, like email phishing.

5. Use a Trustworthy, Auditable Proxy System

Secure, tamper-proof voting systems like Survey & Ballot Systems simplify proxy voting. In addition to state-of-the-art data protection, we also use third-party auditing to ensure the validity and safety of elections. Our trusted online system even creates an audit log for each election that you can use for compliance and later reference.

We have decades of experience running secure elections, and we’re here for mutual insurance companies at every step of the election process. Chesapeake Employers’ Insurance Company is a large workers’ compensation insurance group for businesses in Maryland. Before 2019, the company didn’t have an election process at all. It wanted to become a private company, but that required elections—and they didn’t know where to start. SBS educated the company on how to set up the entire process, helping the team with everything from nominations to elections. The company achieved a quorum just ten days into the election, allowing the group to move forward quickly.

“I could have sat down with one thousand books and mapped out how this election should have gone, and I’m sure it would have been kind of an epic fail,” said Chesapeake’s chief legal officer Carmine D’Alessandro. “There’s so much that goes into it. So, I would advise anyone to rely on individuals who have been through this and who do this.”

Guarantee Election Security With Survey & Ballot Systems

Proxy votes are a better way for mutual insurance companies to handle business, but these elections come with special considerations. Whether you’ve offered proxy voting for years or are considering it for your insurance company, security and auditability should always be top of mind.

But balancing policyholders’ expectations, the voting process, and security yourself is challenging. When you need reliable elections that don’t compromise security, go with Survey & Ballot Systems. We help mutual insurance companies set up efficient, compliant elections that achieve quorum quickly for less hassle. Get in touch now to plan your insurance company’s next proxy vote.