GEICO (an acronym for Government Employees Insurance Company) has found that driving down costs brings drivers by the droves into its fold. GEICO has traditionally provided auto and other insurance to preferred low-risk demographic groups (such as government and military employees) but has also begun to sell to nonstandard (high-risk) drivers. In addition to auto coverage, the company's offerings include motorcycle and RV insurance and emergency road service. GEICO eschews agents in favor of direct marketing through such vehicles as direct mail, TV, radio, and the Internet. Its gecko mascot is one of the most recognized marketing icons. The company is a subsidiary of Warren Buffett's Berkshire Hathaway.
GEICO serves customers in all 50 US states. It has about a dozen service offices, as well as seven affiliated locations, to administer and maintain its policies.
Sales and Marketing
Soliciting customers directly through its marketing campaigns, including affiliate and marketing partnership programs, eliminates the need for a large and expensive sales or agency force, a fact GEICO's competitors have begun to realize. Allstate, for one, has established direct sales operations. However, GEICO's steady increase in market share is tied directly to an increase in advertising spending.
GEICO, now one of the largest auto insurers in the US, is among the few major insurers that still make auto insurance the backbone of their business, despite the commoditization of the market (with competition bringing prices down, profit margins keep getting smaller). As consumers feel more pinched economically, they are looking for lower-priced necessities (like auto insurance), and GEICO has been reaping the benefits with steady growth in new business. The firm serves 11 million auto policies covering more than 18 million vehicles.
While the company hasn't written homeowners insurance coverage in years, it does offer homeowners, renters, boat, and life insurance products written by non-affiliated insurance companies. Berkshire Hathaway also uses GEICO's direct marketing channels to sell annuities, commercial auto policies, and personal umbrella insurance.
GEICO was founded as Government Employees Insurance Company in 1936 by Leo Goodwin, who aimed to sell insurance policies to US government and military employees. The company became a subsidiary of Berkshire Hathaway in 1996.
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