By Dr. Carl Findley III
Mark your calendars: February 19th is coming. Last year, Mayor Robert Reichert officially declared February 19th GEICO Appreciation Day in Macon. Reichert even presented GEICO with a key to the city of Macon after the company raised over $1 million for United Way. The key and honorary name day were a symbolic gesture underlining the reality that the past, present, and future of Macon and Middle Georgia are intertwined with this national insurance powerhouse.
Warren Buffet, a self-made businessman who bought his first stock at 11 years old and is now the second richest man in America and one of the most respected voices in American investment circles, originally invested in GEICO stock in 1951 as a young and eager 21-year-old business student at Columbia University. The original price for one share of publically traded GEICO stock back in 1948 was $27. Today, a share in Berkshire Hathaway, the parent company of GEICO, is worth over $224,000. Buffet is one of America’s great success stories, and that success can be traced to a decision that Buffet is quick to admit “changed my life,” the buying of GEICO stock.
GEICO—its official name is Government Employees Insurance Company—was actually founded in the thick of the Great Depression in 1936 by Leo and Lillian Goodwin, targeting insurance to just about the only people who had any money at the time: government and military employees. GEICO has a privileged relationship with federal employees that continues today and is reflected in GEICO’s strong ties to Washington, D.C. Because of GEICO’s historic ties to insuring military employees, Macon’s proximity to Robins Air Force base, and the pool of potential customers there, the base was a major factor in GEICO’s move into Middle Georgia.
GEICO’s beginnings in our community, however, were very humble compared to the sprawling complex tucked away about 5 miles from downtown Macon just off I-16 that few people ever see. Back in 1974, the company started out in downtown, on Poplar Street in the old First National Bank office building. An office that started with 150 employees has now grown to 5,646, a story of growth and development that any city in America would fight to call their own. GEICO came to Macon in 1974. That same year, YKK built its manufacturing plant here. Brown and Williamson Tobacco opened in Macon shortly thereafter, in 1977. It is interesting that all three of these companies moved to Macon during a time of heightened racial tension and under the administration of then Mayor, “Machine Gun” Ronnie Thompson. Brown and Williamson closed its doors in 2004. The story of the closure of one of the largest non-governmental employers in Middle Georgia made it into the pages of The New York Times, signifying the death of tobacco in the South. Although Big Tobacco is long gone, GEICO, which employs twice the number of people Brown and Williamson did at its height, seems a permanent symbol of Macon and Middle Georgia’s corporate relevance.
GEICO’s Macon office has grown at rocket pace since 1974, and few people know that today it’s the single largest GEICO office in the country, almost three times the size of GEICO’s corporate headquarters in Washington, D.C. It’s now the second largest private auto insurer in the United States, the fastest growing auto insurance company for 11 years straight, and the largest private employer in Middle Georgia.
According to GEICO’s Vice President for Southeast Operations, Rhett Rayburn, originally from Tuscaloosa, Alabama and who relocated to Macon in 1993, GEICO has centralized a number of its national operations into the Macon office. This includes Southeast Operations for seven states, the Midwest Operations for eight Midwest states, headed by Rayburn’s colleague, Scott Markell, who is Vice President of Midwest Operations, GEICO’s Emergency Road Services for the entire country, and GEICO’s National Auto Glass Operations. Although GEICO officials are quiet on this point, in a way, because of its size and its central operations, Macon is GEICO’s de facto operational headquarters.
In a recent interview, Rayburn is proud to stress that GEICO is a place where you can start out at the bottom and make your way to the top: “If anybody wants to stay in this area and have a good career with benefits and career advancement and growth, we’re one of the big players.” Although Rayburn cites “cost and finding good property,” as two important reasons for being in Macon, “most of all,” he stresses, “you need good people, a steady stream of good associates to foster that growth.” And yet, with a company of this size, GEICO is also, according to Rayburn, “a microcosm of the community at large,” and so mirrors not only our successes and progress as a community, but also shares our challenges, with a natural concern, as Rayburn puts it with “education, poverty and graduation rates.” He sees GEICO as sharing the community’s goals of “more successfully preparing people for life,” being a “good corporate citizen,” and “raising all ships.”
GEICO is also a company that has bucked against national trends of outsourcing. Outsourcing is a dirty word in American business circles, but not one in GEICO’s everyday vocabulary. GEICO remains firmly rooted in the states and is growing its employee base instead of shedding jobs and benefits. In fact, GEICO’s an example of local, community-oriented growth that could serve as an alternative model for other companies looking for cost-cutting ways to downsize. GEICO is clearly proud of their growth in Macon and Middle Georgia. And even with “70% of new policies now originating online,” Rayburn doesn’t foresee the GEICO’s employment picture changing and stresses that for GEICO “the best way to become the number one auto insurer in the country is to have all our operations state-side.” And that means Macon and Middle Georgia. Now, that’s something we can step back and be proud of.
And yet the auto insurance industry, which is as important to the health of our region as the air force base a few miles down I-75, will have to adapt to coming challenges. And one of these challenges is the driverless car. Yes, you heard right. And it’s coming sooner than we may think. When it does, that means significant changes in how the auto insurance industry operates. Nissan is preparing to have fully autonomous vehicles for consumers by 2020. Ford just announced a major expansion of its research center in Palo Alto, California, devoted to developing driverless cars. Those are just two recent examples. Any citizen or employee who cares about the long-term health of the Macon and Middle Georgia auto insurance industry, and this means GEICO in particular as our largest private employer, should be aware of developments in automobile technology that are on the horizon. Because of GEICO’s privileged place in our local and regional economy, we all need to look ahead.
Last year, at Berkshire Hathaway’s annual shareholder’s meeting, Warren Buffet didn’t mix his words about driverless cars: “That [the driverless car] is a real threat to the auto insurance industry,” and if they “prove successful and reduce accidents dramatically, it will be very good for society and very bad for auto insurers.” If Warren Buffet sees the driverless car as a threat to his own cherished business, in which he originally invested in 1951, we better move carefully, thoughtfully, and proactively if we want GEICO, and companies like it, to continue to grow with us. It’s a clear and present fact: the fate of Macon and Middle Georgia is tied to the fate of GEICO.
Here’s an example of what’s happening right around us. Last year, Fayette County, Georgia, which includes Peachtree City, a mere 80 miles from Macon, made state and national headlines by approving a resolution to allow Fayette County to become a test ground for “autonomous vehicle design, development and testing,” following states like California and Florida that have actually passed laws to allow testing of autonomous cars on public roads. Macon has a history of looking to Fayette County, and Peachtree City in particular, as a model for its own future. Take, for instance, Mayor Reichert’s recent push to transform Macon into a golf-cart-friendly community. Developments there have a funny way of making it down the road to Macon.
Here’s what the driverless car could mean for us Georgians in terms of safety. According to a major study prepared for the National Highway Traffic Safety Administration, driver error accounts for 99% of all automobile accidents on our roads. That means wrecks because drivers either aren’t paying attention, going too fast, or too slow, drinking and driving, seeing incorrectly, making bad decisions, or just falling asleep at the wheel. In 2013, 1179 people died in fatal car crashes on Georgia roads. To put this in perspective, that’s the equivalent of the entire population of Oglethorpe, Georgia disappearing from the map, each and every year. If we could eliminate driver error, we could, theoretically, save almost every one of those lives. Take a look at how one of these driverless cars works.
Recent reports by Bloomberg and the Rand Corporation warn of the real possibility of drastic reductions in auto insurance premiums, with liability potentially shifting to the auto manufacturer. According to one prominent Macon insurance lawyer, “It becomes a product liability issue, instead of driver error” and predicts “fewer accidents for certain” with potential impacts not only on the auto insurance industry in Macon but the legal community as well, especially as the number of accidents and fatalities are reduced. For instance, what happens to DUI’s when there’s no longer a driver behind the wheel? Litigation, he predicts, will shift to “the manufacturer, the software writer, and the agencies maintaining our roads.”
Georgia is taking a wait-and-see approach to driverless cars, but Georgia lawmakers are very aware of how driverless cars will change the current insurance model. Under the gold dome, a much anticipated Georgia House committee report on driverless cars recently acknowledged that “Georgia’s roads and highways could see a reduction in fatal automobile accidents,” citing human error as the major cause of fatalities on Georgia roads. The report urges caution and concludes, in a statement that should be closely heeded in Middle Georgia’s auto insurance corridors, “The present standard of driver insurance will likely be inefficient for autonomous vehicles which will require research of alternative means.”
The report shows how interested, if cautious, Georgia lawmakers are to bringing the driverless cars to our roads. The report states, “Adopting this technology would ultimately increase mobility, reduce cost of congestion, improve land use, save lives, and place Georgia in a position for future stability and growth,” while stressing the need for “adequate funding to higher education facilities and research laboratories.” Clearly, Atlanta is paying attention. So should Macon.
GEICO is watching all of this very closely. “We talk about self-driving cars,” says Rayburn, “we talk about Uber and Lyft, because it changes the landscape.” Rayburn is quick to respond, however, that “we’ll be a big part of that future,” and “if we do our job right,” he says, “there will be a robust open, free, market place for auto insurance,” concluding that “anything that makes our roads safer is a good thing.” Although he is quick to add, “there are a lot of unknowns.”
GEICO is the axle of Middle Georgia’s economy, but it’s also a national company, and what happens nationally is felt here at home. In today’s world, industry leaders and local politicians need to keep abreast of the wider changes that are coming if we want to secure GEICO’s valued place in our city and region’s future, not just for the next five years—but for another forty. Right now, the industry seems to have embraced a “wait and see” attitude toward driverless cars. One of the questions we should start to ask ourselves is how Macon and Middle Georgia can better prepare for the coming boon in self-driving cars while securing its privileged place as a national and regional player in the auto insurance industry market? Business, law, public policy, and human desire are starting to mix together to form a perfect storm—it’ll either be a dynamic, exciting future of innovation and forward thinking in which Macon and Middle Georgia will continue to play a central part or very different story, where the auto insurance industry may go the way of Big Tobacco and the factories that used to dominate the Georgia landscape. For the near future, however, GEICO is humming at record pace. Macon and Middle Georgia should stand tall and proud of the relationship it has forged with GEICO. Like any great marriage, we may have challenges ahead, but we’re together for the long haul.