The History of Geico Insurance

GEICO was founded in 1936 by Leo Goodwin, Sr. and his wife Lillian to provide auto insurance directly to federal government employees and their families.[2] 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 private corporation not affiliated with any government organization.

In 1937, the Goodwins relocated GEICO from San Antonio, TX to Washington, D.C. and reincorporated the company 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 1965 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 1975. He continued as chairman of the executive committee until 1979, when he was named honorary chairman.[3]

In 1974, 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 45 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.

GEICO has also offered other types of insurance besides auto: homeowner's insurance from 1962 to 1996, a sister company, the Government Employees Life Insurance Company (GELICO), offered life insurance from 1975 to 1985. Although GEICO has since focused on its core auto insurance competency (selling GELICO to Legal & General), it uses its established direct sales infrastructure to market homeowner's and other types of insurance underwritten by other 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 telephone and 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, but it does have offices across the country for those consumers who prefer to deal with an agent. It 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. All are made and produced by The Martin Agency, which is based in Richmond, Virginia. GEICO ads have featured several well-known mascots, including: The GEICO Gecko (an anthropomorphic Day Gecko) who is the most prevalent spokesperson and speaks with a Cockney accent. The Gecko was initially voiced by Kelsey Grammer, followed by broadcaster Dave Kelly, and is currently voiced by Jake Wood.

The GEICO Cavemen (from ads claiming using their website is "so easy, a caveman could do it") who then became the stars of the short-lived sitcom (unrelated to GEICO) Cavemen. Maxwell, the GEICO "Piggy" who shouts an annoying, long "Whee" and appears in more radio and TV commercials.

A small stack of money with eyes and the song "Somebody's Watching Me" (Originally recorded by Rockwell, however the version used on the GEICO commercials was a remake recorded by the duo Mysto & Pizzi[4]). 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, including Maxwell the Piggy.

The "money savers" campaign enlisted actors to portray average consumers who have resorted to various humorous extremes in order to save money, such as teaching a dog to sing or teaching a group of Guinea pigs to row a boat and perform some mundane task for the consumer, and then presented switching to GEICO as an easy alternative to such endeavors with the common line ".... there's an easier way to save money." The "Happier Than...." duo features Jimmy and Ronnie playing a guitar and a mandolin, respectively, on a small portable stage.

They comment on a fictitious preceding event, such as a man dressed in 15th century attire laughing as he leads a trio of speed boats with the painted names Nina, Pinta, and Santa Maria. After cutting to the duo, one says to the other "You know, folks who save hundreds of dollars by switching to GEICO sure are happy." The other than replied, "How happy are they, (Jimmy/Ronnie)?" and in the case above, the response is "Happier than Christopher Columbus in a speedboat!"

There are also GEICO ads that feature stories from GEICO customers about situations in which the company assisted them, but are translated by celebrities like Little Richard and Joan Rivers. Film trailer announcer Don LaFontaine appeared in one such ad, shortly before his death. The tag announcer for these spots was D.C. Douglas. GEICO is also an official sponsor of the National Hockey League and themed commercials for that always feature members of the hometown Washington Capitals. Competition

GEICO's major competitors include Amica Mutual Insurance, Liberty Mutual Insurance, State Farm, Allstate, 21st Century Insurance, Progressive, Nationwide Insurance, and United Services Automobile Association[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.[5] See also List of United States insurance companies

References

  • Jump up ^ Revenue: premiums written (2004), from Berkshire Hathaway 10-K. U.S. Securities and Exchange Commission, December 31, 2004. Accessed 17 December 2009.
  • Jump up ^ GEICO History: An American Success Story. GEICO official site. Accessed 18 December 2009.
  • Jump up ^ Fowler, Glenn. "David Lloyd Kreeger Dead at 81; Insurance Official and Arts Patron" (obituary). The New York Times, November 20, 1990. Accessed 17 December 2009. Jump up ^ http://www.geico.com/about/commercials/music/kash/
  • Jump up ^ "Consumer Reports October 2010".