GEICO an acronym for Government Employees Insurance Company
My dad had it for the twenty plus years he was in the military. I always associated it with military and government families. Weren’t GEICO’s rates discounted to help them out? Or even subsidized by Uncle Sam?
I recall GEICO ads beginning in the 1980’s and was surprised they had started selling to the public. They are one of the more aggressive advertisers on tv. The gecko, cavemen, and many other clever ads.
Whats the straight dope? Did the company reorganize? What brought the change?
According to Wikipedia, they started selling to the general public in 1974, although the company’s official history website doesn’t mention that specifically. They were looking to grow, though, so probably that was just the point where they couldn’t expand more within their target demographic. Neither source mentions a government subsidy ever – just a plan to market to government employees and enlisted men.
Warren Buffet has been a long-term investor in the company, up to the point where in 1996 he outright bought all of the outstanding shares and made the company part of Berkshire Hathaway.
FWIW, USAA is the same story. They used to be limited to US DoD officers & former officers only.
Then they decided to grow and expanded their eligibility to all military, officer & enlisted. Then kids of military. Then descendants of military. Then folks who can spell “military”. Then folks who can’t.
I don’t think it was that GEICO’s rates were subsidized but instead, perhaps, limiting the client base to government employees meant that they were a better risk than the general public.
And also, subject to less regulation than if they were open to the general public. And if you become more regulated by general rule changes, that ceases to be an advantage.
Around here one of the things that happened was that the management of the non-banks realised they could get paid more if they took their organization public.
This is a common pattern in insurance; companies start out either as mutuals, or as stock companies serving a niche market. Eventually they accumulate capital and broaden their horizons, but retain legacy names that have little to do with current operations–GEICO, USAA, Fireman’s Fund, Woodmen, Farmers.
An example in the UK is the NFU Mutual (National Farmers Union). Started in 1910 by a bunch of farmers to offer cheap insurance to union members as a recruiting tool.
They still work with farmers but since the turn of the century they have insured anyone and everyone.