GEICO

Government Employees Insurance Company
(doing business as GEICO)

Type	Subsidiary
Industry	Insurance
Founded	Fort Worth, Texas, U.S. (1936)
Headquarters	Chevy Chase, Maryland, U.S.
Key people	Tony Nicely, Chairman, President & CEO, Treasurer
Products	Auto insurance
Revenue	US$9.212 billion (2004)
Employees	24,000
Parent	Berkshire Hathaway
Website	geico.com

GEICO headquarters in Chevy Chase, Maryland

The Government Employees Insurance Company (GEICO /ˈɡaɪkoʊ/) is an auto insurance company. It is a wholly owned subsidiary of Berkshire Hathaway that as of 2007 provided coverage for more than 10 million motor vehicles owned by more than 9 million policy holders. GEICO writes private passenger automobile insurance in all 50 U.S. states and the District of Columbia. Rather than relying on agents to sell policies, GEICO uses a direct-to-consumer sales model and puts funds saved from not paying agent commissions toward the purchase of television advertising, with several campaigns running simultaneously in national markets. Its mascot is a Gold dust day gecko with a Cockney accent. GEICO is well known in popular culture for its advertising, having made a large number of commercials intended to amuse viewers.

History

GEICO was founded in 1936 by Leo Goodwin and his wife Lillian to provide auto insurance directly to federal government employees and their families. Since 1925, Goodwin had worked for USAA, an insurer which specialized in insuring only military personnel; he decided to start his own company after rising as far as a civilian could go in USAA's military-dominated hierarchy. Based on Goodwin's experience at USAA, GEICO's original business model was predicated on the assumption that federal employees as a group would constitute a less risky and more financially stable pool of insureds, as opposed to the general public. Despite the presence of the word "government" in its name, GEICO has always been a corporation not affiliated with any government organization.

The Goodwins relocated GEICO in 1937 at Washington, D.C. and reincorporated as a D.C. corporation after realizing that their business model would work best in the place with the highest concentration of federal employees.

An important figure in GEICO's history is David Lloyd Kreeger, who became president of the company in 1964 and helped steer it into a major insurance enterprise. In 1948, he formed a group of investors who bought into GEICO right before it went public that year. He became senior vice president and general counsel of the company. Six years after becoming president of GEICO in 1964, he was named chairman and chief executive officer. He retained those titles until he retired in 1974. He continued as chairman of the executive committee until 1979, when he was named honorary chairman. Intriguingly, the GEICO web site avoids any mention of Kreeger.

In 1973, under Kreeger's leadership, GEICO began to insure the general public, after real-time access to computerized driving records became available throughout the United States, and it was briefly the fifth-largest U.S. auto insurer. By 1975, it was clear that GEICO had expanded far too rapidly (during the 1973–75 recession) when it reported a $126.5 million loss. To prevent GEICO from collapsing, a consortium of 27 insurance companies agreed to take over a quarter of its policies, and it was forced to issue a stock offering (thus diluting existing stockholders) to raise money to pay claims. It took five years (during which the company shrank significantly) and a massive reorganization to set GEICO on the path to recovery.

Besides auto insurance, GEICO also offered other types of insurance during its history. From 1949 to 1981, GEICO's sister company, the Government Employees Life Insurance Company (GELICO), offered life insurance, and from 1960 to 1995, GEICO offered homeowner's insurance. Although GEICO has since focused on its core competency of auto insurance, selling GELICO to Legal & General, it uses its established direct sales infrastructure to market homeowner's insurance and many other types of insurance underwritten by other insurance companies.

In 1996, after many years as a publicly traded firm, GEICO became a wholly owned subsidiary of Berkshire Hathaway.

GEICO generally deals directly with consumers via the telephone and the Internet through its own insurance agency, the GEICO Insurance Agency, thus freeing up capital that would otherwise be spent on employing insurance agents in the field. The company does have many offices across the country for those consumers who prefer to deal with an agent. The company is now the third largest direct writer of private auto insurance in the United States.

Advertising campaigns

Main article: GEICO advertising campaigns

GEICO has many well known ad campaigns. GEICO ads have featured several well-known mascots, including:

• "The GEICO gecko" (an anthropomorphic Day Gecko)
• The GEICO Cavemen (from ads claiming using their website is "so easy, a caveman could do it") who were the stars of the short-lived sitcom (unrelated to GEICO) Cavemen.
• A small stack of money with eyes and the song "Somebody's Watching Me" by Rockwell.
• Actor Mike McGlone, who uses film noir-style narration to compare the ease of GEICO to things, famous people, or idioms. ("Could switching to GEICO really save you 15% or more on car insurance?...Is having a snowball fight with pitching great Randy Johnson a bad idea?") The scene is then acted out, with typically humorous results. In addition to Johnson, other ads have included Charlie Daniels, R. Lee Ermey, and Ed "Too Tall" Jones among others.

There are also GEICO ads that feature stories from GEICO customers about situations in which the company assisted them, but are narrated by celebrities like Little Richard. Film trailer announcer Don LaFontaine appeared in one such ad, shortly before his death.

Competition

GEICO's major competitors include Amica Mutual, The Hartford Financial Services Group, Liberty Mutual Insurance, State Farm, Allstate, 21st Century Insurance, Progressive, Nationwide Insurance, and USAA^{[citation needed]}. The October 2010 issue of Consumer Reports ranks GEICO 13th out of 22 automobile insurers based on a survey of more than 28,000 readers.

Slogans

• A 15 Minute Call could save you 15 percent or more on car insurance (1994-2001)
• A 15 Minute Call could save 15 percent or more (1997-2000)
• 15 minutes could save you 15 percent or more on car insurance (2001-present)
• 15 minutes could save you 15 percent or more (2003-present)
• 15 minutes could save you 15 percent (2006-present)

See also

• List of United States insurance companies

External links

• GEICO official web site