Auto Insurance essay
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GEICO is an acronym that stands for Government Employees Insurance Company is an auto insurance company founded in Fort Worth, Texas in 1936 and has its headquarters in Chevy Chase, Maryland, USA. It is a wholly owned subsidiary of Berkshire Hathaway (Robert & Cunningham, 1997) and covers private passenger automobiles in all 50 states and the District of Columbia. As of 2007 it had provided insurance policy covers to over 10 million motor vehicles owned by 9 million policy holders.
The chairman of the company is Tony Nicely who also doubles as the company President and CEO. As at the year 2004, the company registered revenue to the tune of US$9.21 billion (Culp, 2002) . GEICO has a human workforce of over 24000 employees spread all over the United States. The company deals directly with its target market via telephone calls and the internet and as such saves on the money that would have otherwise been spent on employing insurance agents in the field. It is the third largest private auto insurance writer in the United States according to their website. They are also the fastest growing, due their aggressive advertising campaigns, and their clean reputation as a company.
GEICO has delved into other forms of insurance in its lifetime. Between 1960 and 1995, it also offered homeowners insurance. It markets homeowners insurance by using its established direct sales infrastructure. The company had a sister company, GELICO (Government Employees Life Insurance Company) which offered life insurance from 1960 to 1995.
As of today GEICO offers many forms of insurance. Their core business still is auto insurance though they also offer motorcycle and ATV insurance, home insurance through the umbrella, homeowners, renters, condo insurance and RV insurance to meet almost all the home insurance needs of its clients.
Other products include life, mobile home, overseas, commercial auto, identity theft and classic car collector insurance. These makes up a very large portfolio for the company making it one of the largest insurance companies with a product to suit any insurance need in the market.
GEICO offers very competitive prices on all of their products and that has been how they have managed to remain relevant for over the last 70 years of business. The products they deal with are well researched and relevant and the pricing is fair and competitive as compared to other competitors in the market today offering similar products. The company has also managed to maintain a very good record of paying out premiums and claims to its clients thus attracting and maintaining many more clients.
The company's presence in all the states in America is a testimony to the faith and trust that its clients have in the company. GEICO offers flexible payment options where a client can pay their premiums as a lump sum or in easy monthly premiums.
The company has over the years extended its wings to all the states in the United States making it accessible to anyone interested in buying insurance. The winning strategy is having people on duty to answer to all customer needs everyday of every year, day and night even through holidays. This obviously is a way of attracting new customers since it is comforting to know that help is just a phone call away any time of day.
Promotion has been a major player in the success of GEICO. Marketing the company's products has been a core function of the company in expanding and strengthening its presence all over America. The company has a logo which is a gecko and a mascot.
Campaigns have also involved the Geico cavemen and others that feature clients attesting to the efficiency of the company. The company has also invested in television and radio advertisements to woo in new clients and keep the existing ones.
GEICO gets its strength from many contributors. First its mother company Berkshire Hathaway gives the insurance company the capital strength to remain afloat even when the whole insurance industry is undergoing turbulent times.
Creative and effective marketing strategies that are normally employed by the company put it in the frontline in the insurance industry. Marketing does give a company an edge over the other companies dealing with similar products.
Having a distinguished businessman at the helm like Warren Buffett is an advantage for the company since he will bring his vast wealth of experience into the company and help shape it into a competitive company.
Fairfax Financials have helped the company in making sane business decisions that have pushed it to the top of its league (Phillips, 2002). The wealth of exposure that such a company injects into GEICO will have positive results for the company.
Effective television campaigns are a good way to reach out to the target market of which the company intends to reach thus gaining more clients who contribute to the overall growth of the company.
The strength of the company comes from the fact that it has multiple branches all over the United States thus it has roots spread all over the country making it remain firm in its business. The company also has the advantage of having been in the insurance industry for over 70 years (Chew, 2001) and as such it has experienced all the challenges possible and is thus able to foresee and overcome any challenges that come its way. Having been around for such a long time also makes people trust it and its products since they have heard it and have known its track record over all those years.
A major challenge facing GEICO as an insurance company is the loss of revenue through fraudulent claims. The advancement of technology has made it possible for more people to engage in fraud some of which is detected and unpaid but still some is claimed leading to the loss of money for the company.
Insurance is a lucrative industry since it is out of necessity that people take out insurance. Considering that the insured products tend to be expensive acquisitions people will never cease to be in need for quality insurance products.
It is up to the numerous insurance policy providers to come up with innovative products that have relevance in the market. The costs of premiums should also be revised downwards to attract the remaining populace that has kept away from taking up insurance cover. The insurance companies are very strict on when policy holders are to forward their premiums, as such they too should take up and use systems that will enable them to process and pay out claims as soon as possible without holding onto people's money.