GEICO rolls out 'Welcome Factor' discount for new personal auto policies

Geico Corp. has recently begun submitting personal auto rate filings in several states that offer a "Welcome Factor" discount to new customers.

The plan offers a temporary discount that applies to new policyholders and would be phased out in each subsequent renewal period. The discount first appeared in its Virginia filing submitted to the state regulator Feb. 29. The third-largest US personal auto insurer has since submitted a similar discount in Oregon, Wisconsin, New Mexico and Illinois, according to rate filings collected by S&P Global Market Intelligence as of March 20. The Virginia and Oregon filings are still pending with the regulator.

The amount of the initial discount, phase-out period and the specific insurance subsidiary offering the discount varies among the states. The unit offering the discount in each of the five states is GEICO Secure Insurance Co., while policies underwritten by GEICO Choice Insurance Co. are also available in Oregon, Virginia and Wisconsin.

The initial discount of 9% is available in four states — Virginia, Oregon, Wisconsin and Illinois — and then decreases to 6% on the first policy renewal, 3% for the second renewal and then phases out completely for each policy renewal thereafter. For New Mexico, only an initial discount of 5% would apply.

Other rate reductions for GEICO Secure

In addition to the Welcome Factor discount it is offering to new policyholders, the insurer has filed several other rate reductions within its GEICO Secure unit since the start of 2024.

The actuarial memorandum within the filing in Kentucky, Minnesota and Pennsylvania says the rate reduction is due to a year-over-year decrease in its claims frequency on its new business. The overall rate reductions are 9.8%, 7.0% and 4.1%, respectively.

– Read an article about GEICO and its competitors improved underwriters at the end of 2023. – Download a template to analyze rate filings across select entities, lines of business, and state over a selected period.

Premiums dollars flowed into the insurer's Secure subsidiary in 2023, as it reported a significant year-over-year increase in its direct premiums written during the year. The unit's direct premiums written grew by about 36% to $3.94 billion in 2023. That yearly growth was the second-largest increase among the nine individual insurance subsidiaries that wrote personal auto insurance across the US.

Its Geico Texas County Mutual Insurance Co. unit, which strictly underwrites business in The Lone Star State, reported the largest yearly direct premium change of 66.7% in 2023.