September 2011

JEWELRY INSURANCE ISSUES (formerly IM News), provides monthly insight and information for jewelry insurance agents, underwriters and claims adjusters.

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Jewelry Insurance Issues

Table of Contents

Click on article titles in red

2017

Moral Hazard, Documents and the Bottom Line - January

Ruby and Jade - February

How to mail a diamond - March

Jewelry Insurance Appraisal Standards: JISO - April

Describing a gem's color - May

Why not just put jewelry on the Homeowner policy? - June

GIA Diamond Reports - July

Not just a pretty face - August

Moral hazards on the rise - September

Hurricanes, fires, floods—and jewelry insurance - October

Inherent vice / wear-and-tear losses are rising - November

2016

Inflated appraisals—alive & well! Shady lab reports—alive & well! MORAL HAZARD—ALIVE & WELL! - January

Clarity Enhancements v. Inherent Vice - February

How green is my emerald? - March

Cruise Jewelry - What's the problem? - April

Crown of Light ® - how special is it? - May

Diamonds at Auction — Big gems, big prices, and the trickle-down effect - June

Are you sure her wedding jewelry is covered? - July

What Affects Jewelry Valuation? - August

What to look for – on the jewelry appraisal, on the cert, and on other documents - September

Growing Bigger & Bigger Diamonds - October

Scam season is always NOW - November

Ocean Diamonds - December

2015

Pair & Set Jewelry Claims and the Accidental Tourist - January

Is that brand-name diamond a cut above the others? - February

Vacation Jewelry – Insurer beware! - March

Apple's Smartwatch – The risk of a wrist computer - April

Why you should read that appraisal - May

Smoking Gun! - June

Color-Grading Diamond: the Master Stones - July

Padparadscha—a special term for a special stone - August

Jewelry Appraisal Fees - September

Insuring a Rolex - steps to take, things to consider - October

Diamond camouflage and how to see through it - November

GIA Hacked! - December

2014

Who Grades? - January

Sales, discounts, price reductions, bargains, specials, mark-downs . . . . and valuation - February

Credential Conundrum - March

Frankenwatches - April

Fakes, fakes, and more fakes - May

Marketing Confusion — What is this gem anyway? - June

12 Reasons Not to Insure a Rolex! - July

Why NOT to insure a Rolex: Reasons 5-7 - August

Why NOT to insure a Rolex: Reasons 8-10 - September

Why NOT to insure a Rolex: Reasons 11-12 - October

The Doublet Masquerade - November

Is the gem suitable for the jewelry? Is this a good insurance risk? - December

2013

Wedding Rings on HO? NO! - January

Silver: the new gold - February

Point Protection - March

Tiffany v. Costco - April

What counts in valuing a diamond? - May

Appraising Jewelry - What’s a credential worth? - June

A Cutting Question concerning vintage diamonds - July

Synthesized Diamonds - Scam update - August

Pretty in Pink - Kunzite on parade... - September

Preventing jewelry losses - October

Scratch a diamond and you’ll find . . .??? - November

Synthetics in the Mix - December

2012

Advanced Gem Lab - A deeper look at colored gems - January

Whose Diamond? - February

Appraisal Inflation - It Keeps On Keeping On - March

Big Emerald - April

Changing colors and making gems: Are we seeing "beautiful lies"? - May

Diamonds - Out of Africa. . . or out of a lab? - June

Appraiser's Dream Contest - July

GIA & the Magic of Certificates - August

Pricey when it’s hot: What happens when it’s not? - September

Fooling With Gold - October

Tanzanite – December's stone - November

Branding Diamonds - What do those names mean? - December

2011

Unappraisable Jewelry - January

Replicas - Are they the real thing? - February

Composite Rubies- From bad to worse - March

Jewelry Hallmark - A Well-Kept Secret - April

Non-Disclosure: Following a Trail of Deception - May

Preserving the Diamond Dream - June

Spinel in the Spotlight - July

Jewelry 24/7 - Electronic Shopping - August

Diamond Bubble? - September

Disclosure: HPHT - October

"Hearts & Arrows" Diamonds - November

How a Gem Lab Looks at Diamonds - December

2010

Emeralds - And What They Include - January

Pink Diamonds: From Astronomical to Affordable - February

Palladium-the Other Precious White Metal - March

Bridal Jewelry - April

The Corundum Spectrum - May

How Photos Cut Fraud - and help the insured - June

The Price of Fad - July

Old Cut, New Cut-It's All about Diamonds - August

EightStar Diamonds-Beyond Ideal - September

The Hazard of Fakes - October

Jewelry with a Story - November

Counterfeit Watches - December

2009

Blue Diamond-cool, rare and expensive-sometimes - January

Turning Jewelry into Cash—
Strategy in a Bad Economy
- February

Enhancing the Stone - March

Being Certain about the Cert - April

Every Picture Tells a Story - May

Color-Grading Diamonds - June

The Newest Diamond Substitute - July

What Happens to Stolen Jewelry - August

Jewelry As an Investment - September

Black Diamond: Paradox of a Gem - October

Protect Your Homeowners Market—Keep Jewelry OFF HO Policies! - November

What’s So Great about JISO Appraisal Forms & Standards? - December

2008

Garnet - and Its Many Incarnations - January

Organic Gems - February

Do Your Jewelry Insurance Settlements Make You Look Bad? - March

Don't Be Duped by Fake JISO Appraisal - April

Diamonds in the Rough - May

The Cultured Club - June

Sapphire-Gem Superstar - July

It's a Certified Diamond! 
- But who's saying so?
- August

FTC Decides: Culture Is In! - September

Paraiba Tourmaline – What's in a Name? - October

How Fancy is Brown? - November

CZ – The Great Pretender - December

2007

Moissanite's New Spin - January

Online Jewelry - Buying and Insuring - February

Blood Diamonds - March

Damaged Jewelry, Don't Assume!- April

Chocolate Pearls - May

Appraisal Puff-Up vs Useful Appraisal - June

It's Art, but is it Jewelry?
- July

Diamonds Wear Coats of Many Colors - August

DANGER! eBay Jewelry "Bargains" - September

TV Shopping for Jewelry - October

Enhanced Emerald: clever coverup - November

How do you like your rubies -
leaded or unleaded?
- December

2006

The New Platinum: A Story of Alloys - January

Ruby Ruse - February

How Big are Diamonds Anyway? - March

GIA Diamond Scandal
Has Silver Lining for Insurers
- April

Watch Out for Big-Box Retailers Insurance Appraisals - May

Mixing It Up: Natural and Synthetic Diamonds Together - June

Tanzanite - Warning: Fragile - July

Red Diamonds - August

Inflated Valuations & Questionable Certificates - September

Emeralds - October

Where Do Real Diamonds Come From? - November

Counterfeit Watches - The Mushroom War - December

2005

The Lure of Colored Diamonds - January

Synthetic Colored Diamonds - February

Watches: What to Watch for - March

When is a Pear not a Pair? - April

The Truth About Topaz - May

White Gold: How White is White? - June

One of a Kind - or Not - July

Jewelry in Disguise - August

Valued Contract for Jewelry? Proceed with Caution! - September

Antiques, Replicas and All Their Cousins
October

Grading the Color of Colored Diamonds
November

New GIA Cut Grade for Diamonds - December

2004

Synthetic Diamonds - and Insuring Tips - January

Bogus Appraisals and Fraud - February

A Picture is Worth Thousands of Dollars - March

Don't be Duped by Fracture Filling - April

Gem Scams Point to Need for Change - May

What is a Good Appraisal - June

4Cs of Color Gemstones - July

Gem Laser Drilling: The Next Generation - August

Why Update an Appraisal? - September

When to Recommend an Appraisal Update or a Second Appraisal - October

Secrets of Sapphire - November

Will the Real Ruby Please Stand Up - December

2003

Mysterious Orient:
A Tale of Loss
- January

Bogus Diamond Certificates and Appraisals - February

Can Valuations be Trusted? - March

Spotting a Bogus Appraisal or Certificate - April

Counterfeit Diamond Certificates - May

Case of the Mysterious "Rare" Sapphires - June

Politically Correct Diamonds - July

Name Brand Diamonds - September

Princess Cut: Black Sheep of Diamonds - October

Reincarnate as a Diamond - November

Synthetic Diamonds - December

2002

Irradiated Mail/Irradiated Gems - January

Fake Diamonds (Moissonite) - February

GIA Diamond Report - March

AGS and Other Diamond Certificates - April

Colored Stone Certificates - May

Damaged Jewelry: Don't Pay for Nature's Mistakes - June

The Case of the "Self-Healing" Emerald - July

Mysterious Disappearance: Case of the Missing Opals - August

The Discount Mirage - September

What Can You Learn from Salvage? - October

Gaining from Partial Loss - November

Year in Review - December

2001

Colored Diamonds - January

Good as Gold - February

Disclose Gem Treatments - March

FTC Jewelry Guidelines - April

Myths Part I: Each Piece is Unique - May

Myths Part II: Myths, Lies, & Half-Truths - June

New Trend: Old Cut Stones - October

The Appraisal Process - November

Year in Review - December

2000

Deceptive Pricing - January

Gems - Natural or Manmade - February

Jeweler/Appraisal Credentials - March

Fracture Filling - April

Salvage Jewelery - May

Gem Treatments - June

Don't Ask/Don't Tell - A Buying Nightmare - July

Laser Drilling of Diamonds - August

Jeweler Ethics or the Lack Thereof - September

Gem Scam - October

The Truth about Clarity Grading - November

Year in Review - December

 

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Diamond Bubble?

The price of diamond has been rising. The price of gold has been rising. With prices continually going up, it seems like this is a good time to buy jewelry.

But what if this is a bubble?

Most people buy jewelry because they love it, but they also have a sense that it will hold or increase its value. The current situation certainly supports that idea.

The price of diamond rough went up 27% in 2010, according to DeBeers, and it’s still on the rise.

Gold has been in an increasingly steep climb during the past decade. As the world’s economies falter, more and more people put their funds into gold as a safe haven. Silver prices, too, have begun going up.

Since jewelry manufacturers and retailers can pass on these higher costs to consumers, it may seem to be no problem for them.

Yet many in the jewelry industry are worried. The price rise has been so dramatic, they fear it will come to an end abruptly. This is what happened in the early 1980s, when diamond prices soared, then plummeted when the bubble burst.

Anxiety about that potential burst affects all participants in the jewelry market—and those participants include jewelry insurers.

 

Diamond and Gold in the 80s Bubble

Jewelers

Jewelry retailers buy at the current prices. In a steady or gradually rising market, buying quantity is to their advantage. But if prices drop suddenly, they are caught with goods they must sell at a loss. So in today’s market they are cautiously deciding how much to risk, how much inventory to stock.

At the same time, the economy is such that most consumers feel they cannot afford to pay high prices. So jewelers may alter the kind of jewelry they stock. They may carry more lower-quality gems, treated gems, lab-made gems.

Consumers

A consumer may intend to buy a 1-carat diamond engagement ring. In today’s market, he may decide to settle for slightly smaller stone to keep within budget.

Consumers may also be lured by the low prices of color-treated diamonds, fracture-filled gems, synthetic gems, or even diamond simulants (fakes).

The jewelry’s appraised valuation is (or should be) based on the current market value. Consumers may mistakenly regard the appraised valuation as representing the jewelry’s intrinsic worth, feeling it will never decline in value. But jewelry is a commodity, with a value that is subject to supply, politics, weather, fashion, and so on. If we are in a pricing bubble and that bubble should burst (which some in the jewelry industry regard as inevitable), the value of the jewelry would also drop.

Insurers

Insurers have some important concerns during the current pricing spiral:

  1. Danger of over-insurance
    Settlements are based on the jewelry’s value at time of loss. For quality jewelry, it is important to have a new valuation at least every two years, to reflect the rising or falling of the market. (Note, however, that the appraiser who did the previous appraisal will not be inclined to drop the valuation, so ideally using another appraiser would be best.)

    If a policyholder insures jewelry when diamond values were high, and then prices fall precipitously, premiums should be adjusted accordingly. In the event of a loss, you would not want the policyholder to be outraged at a settlement so much smaller than expected, and then to accuse the company of over-insurance.
  2. “Bargains” & other scams 
    In this difficult economy, many consumers are buying lower-priced jewelry. They may or may not be aware of quality differences. Retailers may be gliding over the fact that a diamond is color-treated or fracture-filled, or even that it is fake diamond covered with a film of genuine diamond. Often a buyer doesn’t know what questions to ask.

    Increasingly, and especially with these spiraling prices, consumers look on the internet for bargains. Auction sites urge buyers to act quickly, but offer more hype about the jewelry than information. Consumers who know little about how jewelry is valued can base purchases on carat weight and price alone, without considering the color, clarity and cut, which significantly affect quality.
  3. Bad appraisals & bogus certs
    Appraisals, especially those supplied by the seller (especially for jewelry purchased on the internet), may side-step quality issues. They can easily just leave off information that would lower the value of the jewelry — or would lose the sale.

    Make every effort to obtain a detailed and reliable appraisal from a graduate gemologist who is independent of the seller. The best choice is a JISO 78/79 appraisal from a Certified Insurance Appraiser™.

    Exaggerated valuations and unreliable “certificates” abound. A diamond report or certificate should only describe the gem’s quality; if it also carries a valuation, it is functioning as a retail sales tool to say the jewelry is worth more than the selling price. Do not rely on the valuations or descriptions from such certificates.

    High-quality diamond jewelry should have a certificate from a reliable lab. See below for the labs we recommend.
  4. Outright Fraud
    If diamond prices fall and a consumer becomes aware that the jewelry is suddenly worth less that he paid, he may decide to file a false claim based on the higher valuation of the old appraisal.

    Be sure to base settlements on descriptive information about the jewelry. A JISO 78/79 appraisal carries a detailed description of all qualities needed to determine value.

 

FOR AGENTS & UNDERWRITERS

Be suspicious of appraisals, lab reports, or other documentation supplied by the seller. These docs often leave out information that significantly affects the value of the jewelry.

For all higher-value jewelry, ask for a second appraisal on JISO 78/79, written by a Graduate Gemologist who is also a Certified Insurance Appraiser™.

We recommend trusting diamond reports only from the following respected labs. You can follow these links to check the veracity of lab reports you receive.

Gemological Institute of America GIA Report Check
American Gem Society AGS Report Verification
Gem Certification and Assurance Lab GCAL Certificate Search

 

FOR ADJUSTERS

Base the settlement on descriptive information from the appraisal and lab report.

Color and clarity treatments substantially lower a gem’s value. Check appraisal documents carefully for terms such as treated, enhanced, or fracture-filled.

Synthesized gems are only a fraction of the price of natural ones. Check the docs for synthetic, lab-made, man-made, or similar terms.

If there are any terms on the appraisals or other docs that you don’t understand, it might be worthwhile to consult a jewelry insurance expert to avoid overpaying on a settlement.

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