Berkshire Hathaway’s auto insurer GEICO is pausing cancellation of coverage due to non-payment and policy expiration, effectively immediately. This pause will remain in effect through April 30, 2020.
In addition, GEICO is prepared to offer maximum flexibility, including special payment plans, to those who need it once normal billing operations are scheduled to resume.
“This ongoing situation impacts everyone, and we want our policyholders to have some peace of mind knowing we’ll be there when they need us most,” said GEICO President and CEO Todd Combs.
In taking this step, GEICO is betting that maintaining policyholder loyalty is more important than trying to squeeze cash out of customers that are out of the blue in a severe cash crunch.
While they may have some policies in arrears, on the positive side for GEICO is that self-quarantining due to the Coronavirus will lead to a dramatic reduction in new claims filed due to reduced mileage.
GEICO, like other leading auto insurers, such as Progressive, Liberty Mutual, and State Farm, normally runs multiple media campaigns. The reason for this is that in recent years the battle for policyholders is primarily a branding battle, not one of service or policy features.
Capturing the wallet of the consumer through the GEICO gecko, wood chucking wildlife, and office wandering camels, is a far more effective than listing the dry insurance features that policyholders are actually purchasing.
GEICO’s doing the right thing, both for consumers and for its bottom line. After all, losing customers at a time when they are down may add to customer acquisition costs down the road when the economy revives.
If GEICO can maintain brand loyalty, it will have done more to cement itself in the heart of the consumer than all the geckos in the world ever could.
© 2020 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.