History - GEICO
GEICO associates who know their company well know the names of Leo and Lillian Goodwin.
It was the Goodwins who in the mid-1930s — while the Great Depression was still in full fury — took a calculated risk to start up what has become one of the most successful and highly respected companies in the nation ... the Government Employees Insurance Company ... GEICO.
Leo Goodwin hammered out the basic business plan during his early career days in Texas. He believed that if he lowered costs in the company by marketing directly to carefully targeted customer groups, he’d be able to pass along lower premiums and still earn a profit. He was right. The business began its upward climb and, in 1936, Goodwin established GEICO operations in Washington, D.C.
Lillian Goodwin worked alongside her husband to launch the company and took an active role in virtually all aspects of the early operation. Lillian, a bookkeeper by profession, took on the accounting tasks but also worked to underwrite policies, set rates, issue policies and market auto insurance to GEICO’s target customers, federal employees and the top three grades of noncommissioned Military officers. By the end of 1936, there were 3,700 GEICO policies in force and a total staff of 12 people.
In 1948, a pivotal figure joined the company. Lorimer Davidson, an investment banker and a friend of the Goodwins, helped them find new investors when the original investors chose other opportunities. Among those new investors was Benjamin Graham, a business professor at Columbia University in New York, who would one day find Warren Buffett in his class. The link between GEICO and Warren Buffett was thereby established, and in 1951 Buffett made his first official appearance in GEICO’s history.
That year, Buffett recounts that he took the train to Washington on a Saturday to learn more about GEICO and found that the office was closed. A janitor directed him to Davidson and that conversation echoed through the years. On the basis of that impromptu meeting, Buffett learned enough to make his first purchase of GEICO stock.
When Leo Goodwin chose to retire in 1958, he named Davidson to be his successor. It was Davidson who would preside at the opening of GEICO’s new headquarters in Chevy Chase, Md., in 1959 after more than 20 years of steady growth.
The 1960s proved to be similarly successful and GEICO experienced virtually unbroken growth. GEICO passed the 1 million policyholder mark in 1964. Insurance premiums reached $150 million in 1965. Net earnings doubled to $13 million in 1966. GEICO opened a number of sales and service offices for walk-in customers and its first drive-in claims office in 1965.
The 1970s were not nearly so good to the company. While in retirement, first Lillian Goodwin passed away in 1970, followed by Leo Goodwin the following year. By the mid-70s, the years of aggressive expansion were starting to show some weaknesses in the company’s loss reserves. It led to a difficult period for the company.
GEICO used the experience to strengthen its underwriting and reserving activities which helped build the company’s current reputation as a fiscally superior organization. Warren Buffett made another appearance in 1976 for a second purchase of GEICO stock, reported to total 1 million shares. Lou Simpson joined the company in 1979 as GEICO’s chief investment officer.
Prudent underwriting prevailed in the 1980s and expansion was slow but steady from then on. GEICO introduced 24-hour, 365-day telephone service for claims, sales and service in 1981 as its emphasis on customer service deepened.
In 1993, Olza "Tony" Nicely was named GEICO’s new chairman, president and CEO, and worked to expand the customer base through a new four-company strategy. Along with it came an increased advertising budget which propelled GEICO toward much higher national visibility.
Warren Buffett liked what he saw. In 1995, his Berkshire Hathaway investment firm made a generous bid for the remaining shares of GEICO’s outstanding stock, and by 1996, GEICO was a subsidiary of one of the most profitable organizations in the country.
That led to national advertising on an enormous scale. GEICO’s ads and direct mail pieces flooded the airwaves and filled mailboxes around the country and the company’s growth shot upward. The GEICO Gecko made its first appearance during the 2000 television season and has quickly become an advertising icon.
In 2001, Leo Goodwin was named to the International Insurance Society Hall of Fame. His ideas have endured and helped GEICO grow into a national favorite.
In 2003, GEICO passed the 5 million policyholder mark, and that year GEICO also opened operations in Tucson, Arizona. Company officials gathered in December in Buffalo, New York, to announce the opening of a new service center there.
With Buffalo up and running early in 2004, yet another big announcement came in the summer when GEICO declared the "good news" about its reentering the New Jersey auto market at a press conference that made local, regional and national news. In December, company growth pushed GEICO to 6 million policyholders.
Today GEICO celebrates its founders Leo and Lillian Goodwin who would be quite proud of the organization’s success and its recent return to New Jersey. Celebrating with them are the company’s 21,500 associates in 12 major locations around the country.
And the future looks equally as bright. Tony Nicely has said that the company’s growth will only be limited by the time it takes to hire knowledgeable associates committed to GEICO’s way of thinking, which can be summed up in these words: excellent coverage, low prices, and outstanding customer service.
More About Geico
GEICO is a personal lines auto insurance company based in the United States. GEICO stands for Government Employees Insurance COmpanies. Despite the name, it was never a government agency but rather a private firm originally founded by Leo and Lillian Goodwin to market auto insurance directly to federal government employees and their families. GEICO was based on the assumption that such persons would constitute a more financially stable and less risky pool of potential insureds than the general public. After real-time access to computerized driving records became available in the 1970s throughout the United States, GEICO gradually began to insure the general public as well.
GEICO generally prefers to deal directly with consumers via the telephone and the Internet, freeing up capital that would otherwise be spent on employing insurance agents in the field. GEICO does, however, market their products through a small number of field agents, most of which are based near military bases. These agents are known as GFRs (GEICO Field Representatives).
GEICO is a wholly-owned subsidiary of Berkshire Hathaway and currently provides coverage for 10 million vehicles owned by 7 million policyholders.
GEICO's advertising strategy incorporates a saturation-level amount of print (primarily mail circulars) and television parody advertisements, as well as radio advertisements. The ads, which are notable for their sheer volume as much as their content, sometimes focus on the company's mascot, the GEICO gecko, created by The Martin Agency and most recently a CGI creature generated by Rhythm and Hues Studios. In the first commercial, where people kept calling the gecko as a wrong number for GEICO, the gecko was given a high-class British accent because it would be unexpected, according to The Martin Agency's Steve Bassett. In current commercials the gecko's accent is more working-class, to further "humanize" him and make him "more accessible and someone you enjoy listening to, some bloke you want to get to know."
Another common theme is misdirection, in which the commercial appears to be about something unrelated, or not even be a commercial, and a person comes to say "I've got great news", but then unexpectedly says "I just saved a bunch of money on my car insurance by switching to GEICO!". The commercials use a variety of fictional characters such as Speed Racer and professional wrestlers as well as real people such as Tony Little spoofing themselves. An additional theme is where fictional products are promoted, but the plugs end with "But it won't save you any money on car insurance." After the GEICO slogan is heard, the commercials end with "Why haven't you called Geico?" This type of reality-bending in commercials is reminiscent of the Energizer Bunny campaign for batteries which began in the mid-1990s.
In 2005, GEICO began an advertising campaign featuring "cavemen" in a modern setting. In these commercials, a GEICO spokesman tells how signing up for insurance is so easy that a caveman can do it, and ends up offending the cavemen who are still around, either as part of the commercial's production crew or in erudite society.
GEICO also began more parody advertisements such as Japanese idol fan clubs, upcoming fictional Saturday morning cartoons, a cereal commercial with a green extreme panther, and senator election campaign ads. But the plugs end with "But it won't save you any money on car insurance." After the GEICO slogan is heard, the commercials end with "Why haven't you called Geico?"
GEICO Summary
GEICO is a personal lines auto insurance company based in the United States.
GEICO, also known as GIECO, stands for
G overnment
E mployees
I nsurance
CO mpany. Despite the name, it was never a government agency but rather a private firm originally founded by Leo and Lillian Goodwin to market auto insurance directly to federal government employees and their families.
GEICO was based on the assumption that such persons would constitute a more financially stable and less risky pool of potential insureds than the general public. After real-time access to computerized driving records became available in the 1970s throughout the United States,
GEICO gradually began to insure the general public as well.
