Geico Cuts Rates by 10.8 Percent for California Policyholders
In compliance with new state rules in California, Geico is planning to cut rates for all 436,000 policyholders in the state by an average of 10.8 percent, translating into an approximate savings of $150 per policy -- nearly 66 million in savings on the whole. The regulation stipulates that insurance should be based on motorists' driving records, not their gender, marital status, or location. Although Geico isn't the only insurance company complying, it is one of the first, putting new rates into effect on August 30th, a full year before the deadline.
California Insurance Commissioner Steve Poizner thinks that Gecko is setting the bar, saying in a statement, "As a top insurer in California, Geico is an excellent example that insurers can serve the best interests of their customers and operate profitably at the same time."
With a $66 million dollar loss in revenue, that seems hard to believe. But Geico has proven in the past that it can offer lower rates without negatively impacting its financial strength. It will be interesting to see when competitors follow suit, and if once again Geico proves their business strategy (if you lower it, they will come) effective.