GEICO
Encyclopedia
The Government Employees Insurance Company (GEICO ˈ) is an auto insurance
Vehicle insurance
Vehicle insurance is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise therefrom...

 company. It is a wholly owned subsidiary of Berkshire Hathaway
Berkshire Hathaway
Berkshire Hathaway Inc. is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States, that oversees and manages a number of subsidiary companies. The company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years,...

 that as of 2007 provided coverage for more than 10 million motor vehicles owned by more than 9 million policy
Insurance contract
In insurance, the insurance policy is a contract between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for payment, known as the premium, the insurer pays for damages to the insured which are caused by...

 holders. GEICO writes private passenger automobile insurance in all 50 U.S. states and the District of Columbia
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....

. 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
Gold dust day gecko
Gold dust day gecko is a diurnal subspecies of geckos. It lives in northern Madagascar and on the Comoros, it has been also introduced to Hawaii and other Pacific islands. It typically inhabits various kinds of trees and houses...

 with a Cockney
Cockney
The term Cockney has both geographical and linguistic associations. Geographically and culturally, it often refers to working class Londoners, particularly those in the East End...

 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
Leo Goodwin, Sr.
Leo Goodwin is most noted for founding GEICO in 1936, with his wife Lillian Goodwin, while the Great Depression was still in full fury.-Background:...

 and his wife Lillian
Lillian Goodwin
-Background and Family:She was married to Leo Goodwin, Sr. and mother to Leo Goodwin, Jr. She moved to Fort Lauderdale, Florida in the 1960s. She died in 1970.-Professional career:...

 to provide auto insurance directly to federal government employees and their families. Since 1925, Goodwin had worked for USAA
USAA
United Services Automobile Association is a Fortune 500 financial services company offering banking, investing, and insurance to people and families that serve, or served, in the United States military. In 2011, there were 8.4 million members. The company reported a net worth of $19.3 billion in...

, 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
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...

 not affiliated with any government organization.

The Goodwins relocated GEICO in 1937 at Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....

 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
1973–75 recession
The 1973–75 recession in the United States or 1970s recession was a period of economic stagnation in much of the Western world during the 1970s, putting an end to the general post-World War II economic boom. It differed from many previous recessions as being a stagflation, where high unemployment...

) 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
Legal & General
Legal & General Group Plc , commonly known as Legal & General, is a multinational financial services company headquartered in London, United Kingdom. Its products include life insurance, general insurance, pensions and investments. It has operations in the United Kingdom, Egypt, France, Germany,...

, 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
Berkshire Hathaway
Berkshire Hathaway Inc. is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States, that oversees and manages a number of subsidiary companies. The company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years,...

.

GEICO generally deals directly with consumers via the telephone
Telephone
The telephone , colloquially referred to as a phone, is a telecommunications device that transmits and receives sounds, usually the human voice. Telephones are a point-to-point communication system whose most basic function is to allow two people separated by large distances to talk to each other...

 and the Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...

 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

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
    GEICO Cavemen
    The GEICO Cavemen are trademarked characters of GEICO in a series of television advertisements for the auto insurance company GEICO, that have aired from 2004 to present. The campaign was created by Joe Lawson of The Martin Agency. In 2004, GEICO began an advertising campaign featuring...

     (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
    Cavemen (TV series)
    Cavemen is an American comedy-drama show which ran on ABC from October 2, 2007 to November 13, 2007. The show was created by Joe Lawson and set in San Diego, California...

    .
  • A small stack of money with eyes and the song Somebody's Watching Me
    Somebody's Watching Me
    "Somebody's Watching Me" is the debut single by R&B artist Rockwell, released on the Motown label in 1984. The song's lyrics relate the narrator's paranoid fear of being followed and watched. It featured former Motown artists Michael Jackson on the chorus and Jermaine Jackson on additional backing...

     by Rockwell
    Rockwell (musician)
    Rockwell is an R&B performer who was signed to the Motown label.-Biography:...

    .
  • Actor Mike McGlone
    Mike McGlone
    Mike McGlone is an American actor, singer and songwriter.He is perhaps best known as the film noiresque spokesman for GEICO insurance posing rhetorical questions in the vein of Robert Stack or Rod Serling, which are then acted out in humorous fashion.McGlone's best-known film credits include two...

    , who uses film noir
    Film noir
    Film noir is a cinematic term used primarily to describe stylish Hollywood crime dramas, particularly those that emphasize cynical attitudes and sexual motivations. Hollywood's classic film noir period is generally regarded as extending from the early 1940s to the late 1950s...

    -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
    Randy Johnson
    Randall David Johnson , nicknamed "The Big Unit", is a former Major League Baseball left-handed pitcher. During a 22-year career, he pitched for six different teams....

     a bad idea?") The scene is then acted out, with typically humorous results. Actor R. Lee Ermey
    R. Lee Ermey
    Ronald Lee Ermey is a retired United States Marine Corps drill instructor and actor.Ermey has often played the roles of authority figures, such as his breakout performance as Gunnery Sergeant Hartman in Full Metal Jacket, Mayor Tilman in the Alan Parker film Mississippi Burning, Bill Bowerman in...

     also appeared in one such scene, where McGlone asked "Does a former drill sergeant make a terrible therapist?"


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
Little Richard
Richard Wayne Penniman , known by the stage name Little Richard, is an American singer, songwriter, musician, recording artist, and actor, considered key in the transition from rhythm and blues to rock and roll in the 1950s. He was also the first artist to put the funk in the rock and roll beat and...

. Film trailer announcer Don LaFontaine
Don LaFontaine
Donald Leroy "Don" LaFontaine was an American voiceover artist famous for recording more than 5,000 film trailers and hundreds of thousands of television advertisements, network promotions, and video game trailers. His nicknames included "Thunder Throat" and "The Voice of God"...

 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
State Farm Insurance
State Farm Insurance is a group of insurance and financial services companies in the United States. The company also has operations in Canada....

, Allstate
Allstate
The Allstate Corporation is the second-largest personal lines insurer in the United States and the largest that is publicly held. The company also has personal lines insurance operations in Canada. Allstate was founded in 1931 as part of Sears, Roebuck and Co., and was spun off in 1993...

, 21st Century Insurance
21st Century Insurance
21st Century Insurance is an auto insurance company and is wholly owned by the Farmers Insurance Group of Companies®. They are headquartered in Wilmington, Delaware, and provide private passenger auto insurance in 48 states and the District of Columbia....

, Progressive
Progressive Corporation
The Progressive Corporation , known as the Progressive Casualty Insurance Company through its subsidiaries, provides personal automobile insurance, and other specialty property-casualty insurance and related services in the United States....

, Nationwide Insurance
Nationwide Mutual Insurance Company
Nationwide Mutual Insurance Company & Affiliated Companies is a group of large U.S. insurance and financial services companies based in Columbus...

, and USAA
USAA
United Services Automobile Association is a Fortune 500 financial services company offering banking, investing, and insurance to people and families that serve, or served, in the United States military. In 2011, there were 8.4 million members. The company reported a net worth of $19.3 billion in...

. 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.

External links

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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