GEICO's Story From The Beginning
The Full Story
Leo And Lillian Goodwin: American Dreamers
In the mid-1930s, at the height of the Great Depression, there weren't many people with the foresight and courage to start up a new company. Yet the husband and wife team of Leo and Lillian Goodwin were up to the challenge. Confident that he could create a successful auto insurance business by marketing directly to carefully targeted customer groups, Leo Goodwin hammered out a business plan during his early career in Texas.
In 1936, he put that plan into action, establishing the Government Employees Insurance Company—the company known and loved today as GEICO. Few people realize that GEICO was initially targeted to federal employees and certain categories of enlisted military officers.
Lillian Goodwin energetically marketed the company to this audience (in addition to doing the accounting, setting rates, and underwriting) and within a year, GEICO had written 3,700 policies and hired 12 staff members.
New Decade, New Investors: Enter Warren Buffett
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.
Interested in the company, Warren Buffett took the train to Washington on a Saturday to learn more about GEICO and found that the office was closed. Fortunately, a janitor directed him to Davidson, and the two had an impromptu meeting that would ultimately have a greater impact on the company than either man could have realized at the time. After speaking with Davidson, 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 new GEICO headquarters in Chevy Chase, MD in 1959 after more than 20 years of steady growth.
The 1960s proved to be similarly successful. GEICO experienced virtually unbroken growth, passing 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, however, were not nearly so good to the company. At the beginning of the decade, both Leo and Lillian Goodwin passed away, and the loss of the company's founders seemed to usher in difficult times for GEICO. 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.
Prudent underwriting prevailed in the 1980s and expansion continued. GEICO introduced 24-hour a day, 365-day a year telephone service for claims, sales and service in 1980 as its emphasis on customer service deepened.
A New Chairman, A Bold Vision
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 quickly became an advertising icon.
Meanwhile, in 2001, Leo Goodwin was named to the International Insurance Society Hall of Fame, and by 2002, GEICO had passed the 5 million policyholder mark.
Continued Expansion, And A Civilized Caveman
In August 2004, GEICO declared the "good news" about re-entering the New Jersey auto market at a press conference in Trenton that made local, regional and national news. That was also the year that GEICO introduced the Cavemen to television audiences in order to drive home the point that using geico.com was "so easy even a caveman can do it." The rest, as they say, is advertising history.
Later that year, GEICO broke ground for a new office in Buffalo, NY to help handle GEICO's thriving business, and by December, company growth pushed GEICO to 6 million policyholders. Building activities in Buffalo were completed in 2005 and associates moved into their new 250,000-square-foot regional center following a grand opening ceremony in October.
Adding Services—Online And On The Ground
In 2006, GEICO marketing efforts, expanding Internet capabilities and customer outreach combined to attract the company's 7 millionth policyholder. GEICO's success continued throughout 2007 as the company grew to 8 million policyholders.
GEICO Auto Repair Xpress® rolled into more than 400 repair shops around the nation, giving policyholders a full service package of extras like onsite adjusters and rental vehicle reservation services.
GEICO introduced several new product lines. Of these, the Powersports unit got off to a good start, driven by the well-established and highly successful motorcycle group.
GEICO Ad Icons Reach Celebrity Status
While GEICO continued its solid growth, its beloved ad icons began to garner accolades of their own. By 2007, the Cavemen were not only featured in new ads, but also on an interactive Web site that showed off their contemporary and very hip lifestyle.
Meanwhile, the Gecko took on an extra job and became the spokescreature for a national touring gecko exhibit at several zoos and aquariums around the country in order to promote wildlife conservation efforts.
In 2008, the Caveman was voted America's favorite advertising icon of the year and joined the GEICO Gecko on the Advertising Week Walk of Fame. The Caveman, still perturbed with GEICO for its "So easy, a caveman can do it" slogan, did not attend the award ceremony.
2009 was another rewarding time for GEICO as associates celebrated a welcome growth spurt by reaching 9 million GEICO policyholders early in the year. This was also the year that the company set its sights on Massachusetts drivers and put out the "Open for Business" sign in the Bay State in May. Now GEICO is truly a national company, providing coverage for drivers in all 50 states and the District of Columbia. To help customers further, GEICO opened a second location in Buffalo, NY for its growing GEICO Insurance Agency operations, offering homeowners, renters, boat and other types of insurance coverage.
In 2010, GEICO provided mobile users with a first in the insurance industry—the ability to quote and buy a policy from mobile-friendly pages on their iPhone and Android mobile devices.
Growth continued in 2012 as a new milestone of 11 million GEICO policyholders was reached early in the year, and the company would add another 3 million over the next four years and become the nation's second-largest auto insurer.
And then things really took off! For 12 consecutive months, from July 2016 through June 2017, GEICO set monthly records for sales and growth, adding its 15 millionth and 16 millionth policies during 2017.
The Next Chapter
Who knows if GEICO founders Leo and Lillian Goodwin could have foreseen the incredible heights that their company would reach? Could they have imagined that GEICO would become the largest auto insurer in Connecticut, the District of Columbia, Florida, Hawaii, Maryland, New Hampshire, New Jersey, New York, and Virginia?* Would they have thought the company could grow to more than 36,000 associates in 16 major locations throughout the country offering insurance in all 50 states and the District of Columbia?
And would they be able to imagine what would happen in GEICO's next chapter? Maybe, maybe not, but one thing hasn't changed about GEICO since 1936: the company's future looks bright. No matter what the coming years hold, GEICO will remain committed to the values on which it was founded: excellent coverage, low prices, and outstanding customer service.
*2017 A.M. Best Market Share Report