Geico appears to be headed for preeminence in the auto insuranceindustry, according to a study by one analyst.

William Wilt with Morgan Stanley property-casualty insurancewrote that "nearly every data point we have says Geico is thenumber-one competitive threat in the auto insurance industry."

Mr. Wilt said that an examination of demographic trends bycompany, cross-selling rates and trends, psychographics, andadvertising effectiveness metrics provides "intriguing andoverwhelming" signs of a new era emerging.

"Investors understand that powerful social and demographicchanges are acting as a tailwind to insurers' underwritingresults," Mr. Wilt wrote.

Examining Geico, Mr. Wilt found it to have customers withdisproportionately higher income and education, and morereceptivity to technology. Geico, based in Chevy Chase, Md., is asubsidiary of Berkshire Hathaway.

The analyst said Geico demonstrates how insurers have joined thebig leagues of advertising.

Mr. Wilt wrote that Geico's $500 million ad spend last year wasgreater than that of Coca Cola USA, while Progressive spent twiceas much as Citibank.

He found that Geico's saturation television advertising has morethan proved its value. While it currently spends 58 percent morethan Allstate on television ads, their effectiveness rate by onemetric is 6.5 times greater, he wrote.

"What can we say, the Gecko works, even for reasons we don'tunderstand," Mr. Wilt wrote of the animated lizard who appears asthe company spokesman in its televised ads.

Mr. Wilt opined that Geico, with its tech-savvy customer base,may be under-spending on Internet advertising. Geico policyholdersboth use and trust the Internet as media outlet in greaterproportion than the company at large, he reported.

For the overall auto insurance market, Mr. Wilt said the era ofsophisticated underwriting-ratemaking techniques as a greatermarket differentiator "seems to be evaporating faster than we hadenvisioned."

In addition, he wrote that cross-selling no longer appears to bethe road to top-line riches. "The market of people willing topurchase single products from single companies is apparently biggerthan we had believed," Mr. Wilt wrote. "This is good news for Geicoand Progressive."