What is GEICO Insurance? History of GEICO 2022

GEICO Insurance: It is a private American auto insurance company. It is the second largest auto insurer in the United States after State Farm. The company has it’s headquarters in Chevy Chase, Maryland.

What is GEICO Insurance? History of GEICO 2022
What is GEICO Insurance?

As of 2017, the company is a completely owned subsidiary of Berkshire Hathaway that provides coverage to more than 24 million vehicles owned by more than 15 million policyholders.

The company provides it’s services in 50 states of the United States along with the District of Columbia. The company operates through internet, Phones and also through licensed insurance agents .

It’s  well known in popular culture for it’s  advertising skills and numerous commercials. It’s  a private association co-founded by Leo Goodwin Sr. and his wife Lillian Goodwin in the year 1936 to sell auto insurances.

History of GEICO Insurance

The company was co-founded in the year 1936 to sell auto insurance to federal government employees and their families. Since 1925 , Goodwin worked as an insurer for the USAA which provided insurance only to military officials. Later, he decided to open his own firm after achieving as much as he could in military hierarchy.

The Goodwin’s funded the GEICO corporation with $25,000 own money and $75,000 from Fort Worth , a Texas based banked Cleaves Rhea. Since Goodwin had an experience with the USAA working for the military officials he was sure of providing his services to federal government officials rather general public to avoid risk and make profit.

Later , in the year 1937 the GEICO corporation shifted from San Antonio, Texas to Washington,D.C. after realising that their corporation would be more successful in a place with more number of federal employees than elsewhere.

In the year 1948 75% stake  of GEICO were sold to a coalition of investors by the Rhea family led by Benjamin Graham’s and after a series of events that took place the company became a publicly traded company with approximately $27/sh.

By the year 1972, the investments made by Graham-Newman’s in GEICO eventually resulted in a position worth $400million and turned out to be the best profitable investment by Graham-Newman’s  and outperformed the rest of their portfolio combined.

From the year 1948 to 1958 , the corporation grew it’s  maket capitalisation to 50 times more .

In the year 1958, after the retirement of Goodwin the company was succeeded by Lorimer Davidson who grew the company’s turnover from $40million to $250 million at compound rate of 16% annually . After the retirement of Davidson the company was taken over by Ralph Peck in the 1970 David Lloyd Kreeger.

Under Kreeger’s leadership the company began to sell insurance to general public after real-time access computerised driving records became available all over the US. At this time GEICO was the fifth largest insurer in the entire US. After Peck’s retirement in the year 1976 , the company faced a huge fall in the price from $42 to $5.

To prevent the collapse of GEICO insurance 45 insurance companies decided to takeover quarter policies of the company to raise money to pay claims. It took the firm 5 years to walk on the path of recovery.

GEICO has also offered other insurances besides the auto insurance such as the homeowners insurance between the year 1962 to 1996.

GEICO became as a publicly traded company in the year 1996 as a wholly owned subsidiary of Berkshire Hathaway.

The company particularly deals via internet and mobile calls and also has a local agent program The company is now the second largest insurance companies in the country.

GEICO Insurance: EVERYTHING YOU NEED TO KNOW

GEICO has its headquarters in Chevy Chase, Maryland. It has a GWP of $35.09 billion as of year 2020 employing over 40,000+ employees with its expertise in auto insurance.

Pros:

  1. The number of complaints against GEICO are way less than any other insurance company.
  2. It provides a huge range of discounts on products and services.
  3. It has robust mobile applications and internet websites.
  4. It has a lower overall average premium.

Cons:

1.It does not offer gap insurance.

2. It may have inconsistent claim processing.

3. It has limited number of local agents and a few programs are only available through partners.

4. It has a highest rates of drivers with a DUI.

Common coverage types

  1. Liability coverage – It pays for death damage or physical injuries when the policy holder is at a fault.
  2. Uninsured motorist coverage – It helps in case when a damage to the property or any injuries occur   to compensate the policy holder when the driver is without a license or insufficient coverage.
  3. Medical coverage – Helps compensate medical expenses related to a car accident or for loss of wages.
  4. Vehicle coverages – It pays for damages caused to the vehicle or other damages as a result of vandalism , theft , fire , flood etc.
  5. Others – It also provides coverages for mechanical breakdowns, rental reimbursements , emergency road services etc.

GEICO Auto Insurance Discounts

  1. Vehicle equipment discount – a discount of upto 23% on air bags system, anti- theft systems and other features.
  2. Driving history & habits – 22% discount for accident free drivers who have been free od accidents over the last 5 years .
  3. Federal employees and military discounts of 12%
  4. Multi policy and multi-vehicle  discount for loyal customers.

Other insurances from GEICO

Other insurances include homeowners insurance, renters insurance, commercial auto, boats, RV’s and ATV’s .

 GEICO Insurance at a glance – 2021

  1. The company insures more that 28 million vehicles and has more than 17 million auto insurer policies in force
  2. It’s  the 2nd largest auto insures private firm in the entire US.
  3. Has more than 40, 000 employees and manages 17 major office across the country.
  4. GEICO enjoys high ratings from A. M. Best, Moody’s and Standard and Poor’s for financial strength and claims-paying ability.

Does GEICO Insurance use independent agents to distribute it’s  products?

 The website of GEICO states that it never uses brokerages or independent agencies to sell its products. The local agents hired by the company work exclusively for the GEICO and are not allowed to represent any other insurance companies or companies that GEICO compete with and partner companies in any way.

The local agents that the company hires are enterpreneur’s that go into business to represent GEICO and it’s  partners exclusively.

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