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GEICO to add 300 jobs

Giant auto insurer invests $2.4 million to expand in Amherst

By Jonathan D. Epstein
News Business Reporter

 Gov. David A. Paterson and executives from GEICO Corp. on Wednesday confirmed that the giant auto insurer will bring at least 300 more new jobs to Western New York and invest $2.4 million over three years as it expands its Amherst service center.

The Washington, D.C.-based insurance carrier, the third-largest in the country and largest in the state, is opening a second location for its GEICO Insurance Agency subsidiary, which sells, services and underwrites other personal insurance for consumers, on behalf of other insurers.

The agency, run by John Zinno, former head of the Amherst service center, is currently based in Fredericksburg, Va., where it employs more than 830. But it has outgrown that location, and will use the extra space at Geico's 251,000-square-foot facility in CrossPoint Business Park to accommodate future growth.

The new jobs will represent a 20 percent increase from the 1,500 currently employed there. "We are pleased that is happening and that one of the most identifiable brands in the nation is investing in Western New York," Paterson said during a press conference, with GEICO's well- known gecko mascot in the room.

In exchange, the site has been designated as a "regionally significant" project under the Empire Zone program, and GEICO will receive $1.5 million in tax credits over the next five years through the towns of Tonawanda and Amherst.

It will also get a sales tax exemption from the Amherst Industrial Development Agency for equipment purchases and 1.6 megawatts of low-cost hydropower from the New York Power Authority through 2013, valued at $1.75 million in savings. The Workforce Investment Boards in Erie and Niagara counties also will provide workforce training assistance.

Paterson and GEICO officials said the company would begin taking job applications immediately. The company is taking applications online at www.geico.jobs. "The first hiring is at high noon. We're not wasting any time," the governor said.

Plans call for the company to create the 300 jobs over three years here, and eventually to build up further. Officials said the agency operation could employ as many as 1,000 over 10 years, bringing total employment for GEICO locally to about 2,500.

That was the ultimate goal GEICO cited when it first announced plans in December 2003 to set up shop in Western New York. And that's been stated as the capacity of the existing building. However, that was also before the financial crisis and recession.

The facility, known as the Northeast Operations Center, now handles sales, service, underwriting and claims for GEICO auto insurance customers in New Jersey and New England. It also serves as a backup for the company's Long Island facility in serving New York state consumers. It's been headed by regional vice president Steve Cunningham since Zinno, an assistant vice president who launched it five years ago, left for Virginia in 2006.

The second floor, while finished, is mostly vacant. "Look at all the empty space. We look [forward] to seeing it full," said GEICO CEO Tony Nicely. "We will get to the 2,500 as fast as we can, anyway we can."

GEICO had originally committed to bringing 1,200 jobs to Amherst when it first obtained $100 million in tax breaks five years ago. With its current workforce, therefore, the company has already exceeded that target, making it eligible for more benefits to support the added growth, officials said.

"I think GEICO has complied with what they promised us," Paterson said. "We've gone into a recession since that deal was negotiated."

Executives said the benefits are essential to support GEICO's low-cost model for consumers, which depends on low operating expenses for the company. "The only way GEICO can grow is to be the low-cost provider," Nicely said. "Any time we can get incentives to get the costs low, that helps."

GEICO is the fastest-growing U.S. auto insurer, covering 9 million policyholders and insuring more than 16 million vehicles. It employs 24,000 in 12 major offices nationwide.

Besides "private-passenger" auto insurance, it also offers coverage for motorcycles, all- terrain vehicles, antique cars, boats, homes, apartments, mobile homes and special events, as well as life insurance and personal umbrella policies. And it offers commercial auto insurance for small corporate fleets.

But aside from auto, GEICO does not underwrite any of those policies itself. Instead, it uses the agency to underwrite and service them for the companies it represents, including Chubb Corp., Travelers Group and Liberty Mutual, who are competitors in the auto business. By offering other kinds of insurance, it can be a one-stop shop for customers, and won't risk losing them to rivals who offer a broader product set.

This is the latest coup locally for the governor and state economic development officials, coming on the heels of Internet search engine Yahoo!'s June 30 announcement that it would build a major data center in Lockport. Officials were also quick to note the expansions and new jobs come during the worst recession in 70 years.

Paterson announced the news together with Nicely, Zinno, and Erie County Executive Chris Collins, before a crowd of more than 125 people.

In landing the jobs, Western New York beat out GEICO's existing operations in Virginia Beach, Va., despite that state's reputation as business-friendly. Company and New York state officials credited GEICO's past experience working with the state, its reception locally in Western New York over the past few years, the quality of life for workers, and the quality of the workforce, with Nicely calling it "an easy decision."

"We have a good workforce everywhere, but no workforce anywhere exceeds the quality we have here," said Nicely. "When we realized we were going to have to open another agency, there were several cities, but you didn't have much competition."

And they credited Buffalo News Publisher Stanford Lipsey, whose longtime advocacy for Nicely to look at Western New York helped bring the company in the first place. GEICO and The Buffalo News are both owned by Berkshire Hathaway, and Warren Buffett is the newspaper's chairman.

State leaders and company executives also touted the collaboration between state and local governments. And Paterson used the opportunity to call again for state lawmakers to rein in the cost of doing business in the state, through property tax relief, lower state spending and pension reform. He even borrowed from one of GEICO's charismatic pitchmen.

"If we could address those three items, we would open the doors to welcome other companies to New York State," said Paterson, decked out in a white suit. "We are going to make it so easy to come into the state, that even a caveman could do it."