Whether you know it through the gecko or the caveman, GEICO is one of the most well-branded insurance firms in the US. The Maryland-based firm is a wholly-owned subsidiary of Berkshire Hathaway and provides coverage for more than 27 million vehicles owned by more than 16 million policyholders. It’s an insurance force to be reckoned with.
A brief history of GEICO
GEICO was founded in 1936 by husband and wife team Leo and Lillian Goodwin, who were brave enough to set up a new company at the height of the Great Depression. The company was established as the Government Employees Insurance Company, with an initial client target of federal employees and certain categories of enlisted military officers. Within a year, GEICO had written 3,700 policies and hired 12 staff members.
In 1948, Benjamin Graham, a business professor at Columbia University in New York, chose to invest in GEICO. This was a pivotal moment in the firm’s history as Graham would later teach a young Warren Buffet at Columbia and therefore establish the famous link between GEICO and Buffet. In 1951, Buffet visited Washington to learn more about GEICO and had an impromptu meeting with Lorimer Davidson, an investment banker and good friend of the Goodwins. After this meeting, Buffet decided to buy some GEICO stock – and the rest is history.
When Goodwin retired in 1958, Davidson was named his successor. He went on to lead the company through 20 years of steady growth, reaching the one million policyholder mark in 1964 and generating insurance premiums of $150 million in 1965. Growth slowed down in the 1970s and years of aggressive expansion were starting to take a toll on the company’s loss reserves.
GEICO responded by exercising prudent underwriting – a move that triggered the second Warren Buffet appearance, when he reportedly purchased $1 million shares in GEICO stock in 1976. In the 1980s, GEICO introduced a 24-hour a day, 365-day a year telephone service for claims, sales and service. This customer-centric model remains with the firm today.
Buffet’s Berkshire makes the bid
In the early 1990s, GEICO went from strength to strength under the leadership of new chairman, president and CEO Olza “Tony” Nicely. Warren Buffet’s Berkshire Hathaway investment firm made a bid for the shares of GEICO’s remaining stock in 1995, and by 1996 GEICO became a Berkshire Hathaway subsidiary.
GEICO at a glance – 2018
- GEICO insures more than 27 million vehicles and has more than 16 million auto policies in force
- It’s the second largest private passenger auto insurer in the US
- The firm employs more than 40,000 associates and maintains 17 major offices across the country
- GEICO enjoys high ratings from A. M. Best, Moody’s and Standard and Poor’s for financial strength and claims-paying ability
What product lines does GEICO cover?
Private passenger auto insurance is GEICO’s most popular offering. Beyond private passenger auto insurance, GEICO also provides: motorcycle, ATV, RV, and boat insurance; homeowners’, renters’, condo, co-op, and mobile home insurance; personal umbrella protection; life insurance; flood insurance; overseas insurance; business owners’; professional liability insurance; general liability insurance; commercial auto insurance; collector car insurance; identity protection; and jewelry insurance.
The GEICO Mobile app was created to provide GEICO consumers with easy access to their car insurance information. It provides immediate access to digital ID cards, roadside assistance, and a virtual assistant who can answer questions related to coverage, billing, and more.
Does GEICO use independent agents to distribute its products?
The GEICO website states: “GEICO never sells its products through insurance brokerages or independent agencies. GEICO Local Agents are exclusive agents for GEICO and partner companies and are not allowed to represent other insurance companies that compete with GEICO and partner companies in any way. GEICO Local Agents are permitted, with prior approval by GEICO, to sell insurance not offered by GEICO and partner companies.
“GEICO Local Agents are entrepreneurs who go into business to represent GEICO and property partners exclusively. Their primary role is to prospect and generate insurance leads and policies that GEICO would otherwise not capture.”
The gecko and the caveman
The GEICO gecko made his advertising debut in 1999 and quickly became a popular symbol for the firm. The idea spawned from a common mispronunciation of the GEICO name as “Gecko”. The key aim of the GEICO gecko is to “save people money” on their car insurance. Five years later, the GEICO Caveman entered the scene with the “So easy a Caveman can do it” ad campaign.