Who Elects the Governing Body of a Mutual Insurance Company?

Last Updated on October 27, 2025 by Hannah Seeley

Whether it’s car insurance or a mutual life insurance company, participating in a mutual company puts policyholders in the driver’s seat by electing the governing body of a mutual insurance company. When someone purchases a policy from a mutual insurance company, they’re doing more than protecting their future: they’re also becoming a part-owner of the organization.

This setup is gaining traction worldwide, with over 4,700 mutual and cooperative insurance companies globally serving 889 million members. Unlike stock insurers, which are governed by shareholder interests, mutual life insurance companies are owned and governed by their policyholders. That means you have a direct say in who leads the company and how it operates.

In practice, this means members get to vote on the board of directors (BOD), which can have a big impact on not only the company but also insurance coverage and finances. In this guide, we’ll break down how governance works in mutual company insurance, how they handle the voting process, and how to overcome common hurdles in the voting process.

How Mutual Insurance Companies Work

In a mutual insurance company, policyholders elect the leaders in charge of the company. Every policyholder is considered a member of the organization, and with that membership comes the powerful right to vote. Each member typically receives one vote, which they can use to elect a board of directors or a board of trustees.

This governing body is responsible for setting the organization’s overall strategy, providing oversight, and deciding how to manage financial surpluses, including whether to reinvest earnings or return them to members as dividends. A stock company’s board, on the other hand, is elected by shareholders, who may or may not be policyholders themselves (and might not have policyholders’ interests at heart).

This different approach can have huge ramifications for policyholders. In a mutual company, members have democratic control over the organization, which influences everything from risk strategy to financial stewardship. The people carrying insurance shape the makeup of the board. There’s no short-term pressure to deliver stock market returns, which allows mutual life insurance providers to focus on sustainable growth, offering stable long-term value to members.

How the Mutual Insurance Company Voting Process Works

In a mutual insurance company, voting is one of the key rights that come with being a policyholder. This democratic process allows members to determine the company’s leadership and long-term strategy by electing the board of directors. Here’s how the voting process typically works:

Nominations

First, the mutual insurance company needs to gather nominations to place candidates on the ballot. The board or a special nominating committee will usually propose a slate of candidates, but in some jurisdictions, policyholders may also submit independent nominations, as long as they meet specific eligibility criteria.

Transparency is critical during this phase. Policyholders want to know that candidates aren’t just boardroom insiders: they want diverse, experienced candidates who understand the company’s mission and represent the member base. Some mutuals even hold Q&A sessions or publish candidate detailed bios to help members make informed decisions. Survey & Ballot Systems supports this transparency by offering customizable nomination software to collect bios, disclosures, and petition signatures – all while keeping the process compliant and user-friendly.

However, outside factors affect who can receive a nomination. There’s a lot of regulatory oversight for mutual insurance companies, which must ensure that nominees meet fiduciary standards. These include acting prudently, loyally, and in the best interests of policyholders. Certain states also require diversity measures, a minimum number of directors, or mandated term limits.

You don’t have to manage nominations manually, either. Survey & Ballot Systems offers nomination software that’s built to support your application process, helping to collect submissions, verify eligibility, and stay on track. For example, we helped Chesapeake Employers’ Insurance Company educate their team and revamp the organization’s election and nomination processes. They managed the process, while our platform made everything simple. In fact, the organization reached its quorum requirement in just ten days – a record for voter participation.

Voting

Once you have a slate of candidates available, it’s time to plan the vote. Most mutual insurance companies hold votes during their annual meeting. Each policyholder, regardless of how many policies they hold, is usually granted one vote.

But what if a member can’t make it to the annual meeting? Instead of disenfranchising them, many mutual insurance companies offer proxy voting as an alternative. With this option, policyholders who can’t attend meetings authorize a representative (called a proxy) to vote on their behalf. It also helps the organization meet quorum and encourage participation, ensuring the election actually reflects policyholder interests. It’s no wonder that so many mutuals rely on proxies for voting.

With the rise of digital tools, mutual life insurance companies are also modernizing how they engage voters. Secure online voting, mobile-friendly ballots, and automated reminders boost participation, especially among younger policyholders or those with limited access to in-person meetings.

Regulations also play a significant role in the voting process. Regulators help maintain the integrity of the process by enforcing rules around vote solicitation, candidate disclosures, proxy participation, and ballot fairness, which prevent undue influence or conflicts of interest. That’s why mutual insurance companies rely on our team to manage the voting process. From online proxy votes to hybrid voting, the experts at SBS help mutual insurance companies ensure every policyholder’s voice is counted.

Tallying Results

Once voting concludes, you must accurately and transparently count the votes to maintain members’ trust in the election process. For a mutual insurance company, where policyholders are both voters and owners, confidence in the integrity of the election is essential.

That’s why many mutual life insurance companies rely on trusted third-party election partners like Survey & Ballot Systems to manage vote tabulation. As a neutral provider with no stake in the outcome, we ensure your votes are counted fairly, securely, and our process is designed to support your regulatory requirements. By outsourcing the tallying process, mutual companies build their credibility, reduce potential conflicts of interest, and provide members with the confidence that every vote truly counts.

Overcoming Common Mutual Insurance Voting Challenges

Running fair, transparent elections internally is no small feat, especially for time-strapped insurance teams. Policyholder elections may seem straightforward, but behind the scenes, they often involve complex logistics, compliance requirements, and challenges with low voter engagement. Learn how to overcome these common pain points during the election process to give policyholders the best possible experience.

Low Voter Turnout

This is the most common challenge for any democratically run organization. Even in large mutual life insurance companies, voter participation rates can be disappointingly low. Many policyholders are unaware of their voting rights or are unsure how to participate.

Proxy votes are a convenient solution to low participation, but they aren’t ideal. It’s always best for real policyholders to participate when possible. Fortunately, our expert team can help you with digital voter outreach tools, including personalized email and SMS reminders. We can help you set up omnichannel reminders that meet policyholders where they are – whether that’s email, direct mail, or even mobile notifications.

Eligibility Disputes

Disagreements about candidate eligibility or nomination qualifications can derail the election process and erode policyholder trust. With our nomination management tools, mutual life insurance companies can verify candidate eligibility, collect required documentation, and manage the nomination process transparently, all while complying with fiduciary standards and governance best practices.

Lack of Auditability

Without clear documentation and reporting, policyholders may question the fairness of the election, even if your team executed everything correctly. Plus, it could even put you at risk of falling out of compliance.

Transparency and trust are the foundation of an auditable voting process. Instead of managing everything internally, rely on our voting experts to document every stage of the voting process. SBS provides detailed post-election reporting, audit trails, and detailed documentation to ensure your organization can stand behind its results. From anonymized vote tallies to election certification, we help build trust through transparency.

Where Policyholders Lead, Mutuals Thrive

Mutual insurance policyholders aren’t just buying coverage; they’re also buying a stake in your organization. By electing the board of directors, members shape the strategic direction, financial priorities, and long-term stability of the company. When policyholders engage in the governance process, they help ensure that decisions reflect their best interests, not those of outside shareholders.

Still, determining eligibility, ensuring proper documentation, and streamlining the voting process is far from simple. SBS helps mutual insurance companies uphold the highest standards of fairness while making the process as streamlined as possible. Whether you need help with compliance or just want to make voting easier for your members, our human-centered, technology-rich approach makes all the difference. Contact SBS today to revamp your mutual insurance voting process.