Analyzing Insurance Company Structure- Type, Line of Business, and Ownership Status

Analyzing Insurance Company Structure- Type, Line of Business, and Ownership Status

Government Employees Insurance Company (GEICO)

Introduction

Government Employees Insurance Company (GEICO) is the second-largest auto insurance company in the U.S. after state farm insurance. Geico was founded in 1936 by Leo and Lilian Godwin to offer auto insurance services to federal government employees and their families. Godwin, who had worked with USAA, an insurance company specified for insuring military personnel, saw an opportunity where the federal government employees did not have specific insurers to guarantee them. Therefore, he decided to establish GEICO targeting the federal employees who own vehicles. The company’s initial business model was that it thrived on the assumption that the federal employees constituted a less risky and more financially stable group of insured rather than the general public (Hall-Gaisler, 2021). Since then, Geico has been offering auto insurance coverage as a private entity. This research focuses on examining GEICO, one of the biggest insurance companies in the U.S. The study would find out Geico’s type of insurance, whether it is a multiline or single line, the states where the company is licensed, the reserve level, the industry ratings, its uniqueness, the career opportunities the company, and of course, how the company sells its insurance policies.

Geico has its headquarters in Chevy Chase in Maryland, and as discussed earlier, it is the second-largest insurer in the entire United States. Berkshire Hathaway wholly owns Geico as a subsidiary. The current status of Geico is that it offers coverage to more than 28 million motor vehicles that more than 15 million policyholders own. This company writes or insures private passenger automobile insurance in all the states of the U.S. and the District of Columbia. Although the company’s name bears the word, “government” the company is not a government entity. Still, it is purely a private company owned by Warren Buffet under Berkshire Hathaway (Hall-Gaisler, 2021). Geico became Buffet’s company in 1956 when he invested in the company by purchasing all of its shares and thus became a subsidiary of Berkshire Hathaway. Currently, Geico has about 40,000 employees with a revenue of about $35 billion.

The primary insurance cover that Geico offers to its customers is the automobile. Under the automobile cover, the company offers various types of coverage. These covers include; comprehensive cover, collision cover, liability cover, medical cover, emergency road service cover through the Geico app, mechanization breakdown cover, rideshare insurance cover, and under-insured or uninsured covers. Therefore, automobile insurance is comprehensive, and customers choose which type of risks they would like their vehicles to be insured against (Hall-Gaisler, 2021). Just like other national insurers, Geico offers similar lines of insurance covers. It also provides separate rideshare insurance that covers a vehicle while driving for service, such as a demand delivery service. Geico often extends personal vehicular insurance to the customers’ business (Career Management, 2021). The Geico mobile application usually comes with a virtual assistant that allows clients to see the billing and policy information and documents easily.

Other than the automobile insurance line, Geico has grown since it now offers another line of insurance covers. They include boats, collector cars, homeowners, landlord insurance, business liability, cyber liability, pet insurance covers, travel and overseas insurance, medical malpractice, and life insurance. Since it has managed to provide cover for all against all the risks, the company has a large customer base, and it is no wonder that it is the second-largest insurer in the whole of the U.S. (Hall-Gaisler, 2021). Another aspect that makes the company great is that the insurance policies it offers are of high value. Vehicles and homes are high-value properties. Therefore, an insurer can manage to have everything the insurers require, meaning that the company has a great future.

As it pursues its primary goal of selling insurance covers to its clients, Geico also offers its customers some insurance discounts. Not all insurance offer discounts on the insurance products they sell to customers. However, Geico offers discounts as a business strategy to attract and even maintain clients. Most of its clients are happy with the discounts they have submitted. The discounts that the company offers tend to vary depending on the product. Examples of the discounts that Geico offers to its clients are; good student discounts, good driver discounts, multi-vehicle discounts, multi-policy discounts, and more (Hall-Gaisler, 2021). These discounts aim at encouraging the clients to be cautious while driving to reduce losses. Moreover, as mentioned, discounts seek to attract more and maintain customers.

Geico serves all kinds of customers regardless of their background or financial muscles. This is possible because the company offers the cheapest rates one could find in the insurance industry. Thus, almost anyone could afford to buy Geico’s many insurance covers. Therefore, these cheap rates are suitable for young drivers (Career Management, 2021).  The U.S. insurance industry is among the few most sophisticated industries worldwide; thus, companies such as Geico, which is among the largest in the industry, understand a lot and have won the trust of customers. Its long-term experience in the market has enabled it to develop cheap insurance products, thus attracting more customers than its competitors.

When it comes to rating, Geico has the best ratings in various aspects. Geico was rated at A++ from the AM bests, which is the highest rating for insurers. A rating of A++ means that the company has enough funds to pay all of its filed claims (Career Management, 2021).  As of 2021, Geico’s financial stability was $32 billion in assets.  Geico is also known to be the cheapest insurer since it has the lowest rates among its competitors. Geico is rated as the third insurance company with the highest customer satisfaction; its customers are most likely to recommend it for its auto insurance over others (Geico.com, 2021). In terms of size, Geico is the second-largest insurance company after State Farm and Progressive Insurance. Geico’s policy purchase is always more than the filed claims every year.

Geico sells its insurance policies through local agents known as Geico Field representatives; these representatives advertise the company’s insurance covers available to customers. The representatives engage the prospective customers and convince them to sign up with the company’s insurance covers. The field representatives are spread in every part of the U.S. They have small offices where they carry out their businesses. (Hall-Gaisler, 2021). A large number of field representatives enables Geico to receive many customers every year. Geico also sells its policies through phone calls directly to licensed insurance agents and websites.

The company is known for its popular advertising culture; its numerous adverts are often entertaining to the viewers. It manages its policies as an insurance agent and then has a separate customer care team that handles the property and the umbrella policies. Thus, Geico has a mixture of both agents and direct selling; both selling methods enable it to reach as many potential customers as possible (Geico.com, 2021).  Moreover, a good percentage of the new customers buy the company’s policies because of the referrals. Existing customers usually refer or recommend their friends to Geico due to its cheap premiums and quality services.

Being the second biggest insurance company in the U.S., Geico presents job applicants with many career opportunities. Some of the career opportunities that can be found at Geico are; actuary, data analytics, customer service, information technology (IT), legal services, sales and marketing, cyber security, auto damage, accountants, and more (Geico.com, 2021).  These career opportunities emerge with time, and thus, the applicants should make their applications and wait so that they will be contacted when an opportunity comes up (Career Management, 2021).  College students also have a chance to carry out their internship programs from this company since numerous career opportunities present them with the necessary skills in their area of specialization.

Geico’s exciting facts are that the company has been in business for more than 85 years and has never changed its name. Secondly, Geico was founded by a couple of Leo and Lilian Goodwin. Thirdly, Geico was bought by Warren Buffet in 1956 thus, becoming a Berkshire Hathaway subsidiary till now. Fourthly, Geico is a private company but serves government employees. Other interesting facts about Geico are that it is the second-largest auto insurance company in the U.S. and operates in every state. Geico is also known to be an insurance company with the cheapest premiums hence liked by many. Geico is rated at A++ and is one of the companies with the highest customer satisfaction (Hall-Gaisler, 2021). The company has more than 40,000 employees, making it among the big employers in the U.S. Finally, Geico has a harsher premium penalty than the competitors despite its cheap premiums.

Conclusion

Geico is an American auto insurance company headquartered in Maryland. The company has been in business for more than eight decades now and has over 40,000 employees. Geico specializes in selling insurance policies to auto owners and offers other types of policies it is a multi-policy insurance company. The company has a reserve level of $32 billion and has a rating of A++. Geico ranks third in customer satisfaction and is known for its cheapest premiums. The company presents job seekers with numerous career opportunities, such as accountants, data analytics, sales and marketing, and more. It sells its insurance policies through field agents and directly through phone calls. The interesting fact about this company is that it is a private company but serves government employees. The company was founded by a couple and later bought by Warren Buffet to be a subsidiary of Berkshire Hathaway.

References

Career management (2021). Scoop, There It Is: GEICO Drives Up Berkshire 2020 Underwriting Profit. Retrieved from mnhttps://www.carriermanagement.com/news/2021/02/28/217609.htm

Geico.com. (2021). GEICO History. Retrieved from https://www.geico.com/about/corporate/history

Geico.com. (2021). GEICO At A Glance. Retrieved from https://www.geico.com/about/corporate/at-a-glance/

Hall-Gaisler, K. (2021). Geico Car Insurance Review for 2021. Retrieved from https://www.usnews.com/insurance/auto/geico-car-insurance-review

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This project is an individual assignment:  INSURANCE COMPANY RESEARCH PAPER. This paper requires a minimum of 3-5 pages (min), double-spaced, in APA format, and a minimum of two resources should be used. Example resources.

Company Annual Report

Trade Magazine

Library articles and resources

CHOOSE ONE (1) OF THE FOLLOWING COMPANIES TO RESEARCH

 https://en.wikipedia.org/wiki/List_of_United_States_insurance_companies

Make sure to touch on the below questions.

What type of Insurance Company is this? Health, Life, Property and Casualty, etc……

Is this company MULTI LINE (sells more than one line of business) or SINGLE LINE?

Is this company Privately or Publicly Held

Do they specialize in one line over another? Life but does have other products

What states and or countries is this company licensed to sell in?

From their latest annual report, what is their RESERVE LEVEL?

What are the Industry Ratings for this company? AM Best, Etc….. A++, A, etc..

What is an interesting fact about this company?

What career opportunities might there be for potential applicants?

Do they sell direct to consumers, do they sell through independent agents, or do they do a bit of both?