Leo Goodwin founded GEICO in 1933 after working for the U.S.A.A. insurance company. His idea was to only insure safe drivers like government employees to lower insurance costs. This allowed GEICO to be highly efficient and pass the savings to customers in the form of lower rates. Goodwin's simple innovation took advantage of a low-risk customer base and helped GEICO succeed even during the Great Depression. GEICO remains successful today due to its low-cost structure and business model focused on insuring safe drivers.

1. Leo Goodwin
Famous Entrepreneur and
Founder of GEICO

2. Background Information
 Leo Goodwin worked in the
U.S.A.A. insurance
company for his early years
 This company insures
officers in the military, and
when Goodwin started his
company in 1933 much of
the inspiration for it was
from his time at the
U.S.A.A.
 Because it was in the midst
of the Great Depression,
very few thought Goodwin’s
company could succeed

3. How Insurance Companies Work
 People get insurance so that
they are covered in case they
get in an accident
 For them it’s a good deal
because they don’t have to
spend too much, and they are
no longer at risk
 Insurance companies make
money because they have so
many clients that even when
they are losing money on some,
they are making money on the
vast majority
 Theoretically, insurance
companies can make more
money if they charge more, or
lose less on clients

4. Goodwin’s Idea
 Goodwin's idea was to only
insure very safe drivers so that
the company wouldn’t lose as
much money on claims
 The money GEICO saved by
doing this could then be passed
on to its customers, providing
much lower rates
 Goodwin had found a great
source of safe drivers in his
previous company: government
employees
 By insuring only government
employees GEICO had to pay
claims very infrequently
because the drivers were much
safer

5. Other Business Strategies
 GEICO’s entire business was engineered to be extremely
efficient in order to keep profits high, and rates low
 In order to do this Goodwin had a few key policies:
 Only sell policies via radio and mail, in order to save the large
commissions other companies paid for direct business
 Have very few employees that work hard in order to cut losses from
wages
 Additionally Goodwin and his wife did much of the work in the first
few years, and only needed 12 employees for help
 This efficiency is a large part of why GEICO was able to get
started in the midst of the depression, and why it has lasted for
so long

6. Why The Idea Worked
 Goodwin, like many great
entrepreneurs, came up with
a very simple innovation
 The idea didn’t try to
revolutionize the insurance
field, rather it just improved
on an already successful
business model
 Additionally because many
were looking to spend less in
the 30s because of the
depression, a low cost
alternative like GEICO had
great potential for success

7. GEICO: Still Going Strong
 Because of its cost effective
business structure, and low
risk system GEICO is still in
business
 While it will never be the
biggest company because of
its policy of only insuring
safe drivers, it is also one of
the most stable insurance
companies out there for the
same reason

8. Work Cited
 http://4.bp.blogspot.com/_SkxZvWvZTZM/RexuEACpu9I/AAAAAAAAAFw/7hK8
SMzDkyc/s200/12_CR_News_GEICO.jpg
 http://chrissylee.files.wordpress.com/2009/02/lightbulb.jpg
 http://lockportslugline.files.wordpress.com/2008/08/gecko.jpg
 http://www.jerryfalwell.us/wp-content/uploads/2009/06/insurance-agent.gif
 Bremner, Brian. "GEICOS Acceleration is no Accident." Business Week. 30 Mar.
1992. Print.
 "Company History: Geico Corporation." Answers.com. Web. 22 Sept. 2009.
<http://www.answers.com/topic/geico>.
 Flex, Justin. "The Benefits of Using Geico Car Insurance." Insurance Articles.
Articlesbase. 16 May 2008. Web. 22 Sept. 2009.
<http://www.articlesbase.com/insurance-articles/the-benefits-of-using-geico-car-
insurance-416898.html>.
 "http://www.geico.com/about/corporate/history-the-full-story/" "Geico's Story from
the Beginning." GEICO. GEICO. Web. 22 Sept. 2009.
<http://www.geico.com/about/corporate/history-the-full-story/>.