Jewellery insurance - jewellery valuation scams

Call me Jack

Well - a new client has asked us to value and set a diamond for her. It is quite a nice pink diamond which she bought from a direct source at what we would consider a keen price since the diamond came from the Argyl mine in Australia. Anyway, that isn't the interesting bit - what is interesting is that before finding us she went to her local jeweller and asked them to, firstly, value to stone, and then for a quote to set it (she didn't get as far as the quote though).

The local jeweller sent the stone off to their (we assume) NAG approved valuer who kept it for nearly a month while they attempted to put a value on the stone (apparently the most experienced valuer was ill was the excuse). When they did eventually manage to come back with some sort of value, it was verbal and somewhere between £1000 and £10,000. Nothing like leaving yourself a margin for error is there?? Indeed the actual written valuation seems to not note the diamond's source and values the stone at £12000. She was charged £50 for this. Needless to say, the customer wasn't very happy, which is why she came to us.

She told us this story, and also that during the attempt to value to stone they had called another shop which she had previously used to make a few jewellery repairs. They use small sticky labels on their packaging, just the sort that are really useful to secure small packages, which is exactly what she had re-used it for on the diamond package (called a wrap) to secure the diamond so it didn't fall out. Apparently, the shop had put 2 and 2 together and remembered that she had mentioned a loose pink diamond a couple of weeks earlier so they called her to let her know - the worst part of this story is what they told her.

I seems the valuation company had got someone (assume one of the valuers, a lady actually) to call the shop whose sticker was on the package and said that they had bought this particular diamond from them and would like to buy another - how much would that cost? Of course, the bewildered shop assistant had absolutely no idea what she was talking about and, naturally, asked how much she had paid for that one ... to which the reply was "no actually, lets start again, I'm a valuer and want to get a retail value for this diamond for insurance, so how much would you sell one like it for" . Bearing in mind this is a cold call to someone asking very specific questions about a reasonably rare stone, the shop found this quite irregular and probably reminded her that she was the valuer.

So what are these valuers up to? Its hard to say isn't it. Clearly they had absolutely no idea what they were doing and, after a month of fumbling, were clutching at straws. The point is - valuations on jewellery are like valuing houses. Many factors come into play, and you have to really know your market to make a good appraisal of the worth of an object. For this you need some experience and some training. Like I have pointed out in other posts, the training to become a jewellery appraiser isn't as vigorous as say, the Royal Institute of Chartered Surveyors (since we were likening it to property valuations). Most valuations are easy and have easily accessible data (like a makers mark, a year and and assay stamp of metal and approximate carat weight of stones) which makes them easy to find a replacement cost - with a couple of months doing the job a junior assistant could potentially do this. Some are not as straight forward and require more specialist knowledge and it is these that end up totally bamboozaling the registered valuers. Problem is, they don't admit their inadequacies and undervalue or overvalue the item causing major problems should it go missing or get damaged.

But is it too much trouble to ask the owner of the piece a few questions instead of calling round all and sundry and making yourself look like a fool? It didn't take us long to put a value on the stone, actually about 5 minutes since it had a clear certificate and a reference number which when we accessed it told us everything we needed to know. We also asked the client where it came from, which she was happy to tell us, that she got it from Australia - so there is only one place for a possible source, the Argyl mine. We have dealt with these types of diamonds before and this one was good quality and was worth towards the upper end of the very wide margin the first valuer had put on it verbally.

In this case, the diamond has been seriously overvalued to the tune of around 30% which means that year on year the customer could be paying 30% more than they need to for premiums and, indeed, would unlikely to be offered a cash settlement for the diamond at £12000 despite paying the premiums for that amount.

All seems like common sense to me - watch out, there are professional scammers about taking your money and putting you at risk of insurance losses through their own lack of knowledge.

Jewellery Trade Scams - Scrap Metal Refining

Call me Jack

Well, it would seem that even Jack's personal friends can get totally scammed. About a months ago we went to dinner with two other jewellers we have known for a few years. They had a particularly distasteful story to tell.

They are a husband and wife team who own a lovely shop in the East Midlands where they make bespoke wedding and engagement rings and other handmade jewellery. As such, they produce a certain amount of waste metal, which we in the trade call scrap.

So. What do we jewellers usually do with this scrap? We don't throw it away as its precious metal. We sell it to a bullion refiner, similar to those who offer money for scrap or broken jewellery on the high street. Normally, you would sell it back to the bullion dealer who sold you the metal in the first place as they will likely give you the best price on your account. However, in this case, my friends were cold called by a company called Recycling Trading Company (RTC) whose offices and refinery is in New Bond Street, London. Nice and safe, wouldn't you have thought? No - not at all - quite the reverse actually, and a scam that I am starting to hear more of committed by who we all think of in the trade as highly respectable companies.

Anyway. RTC cold called my friends and asked if they had any scrap for refining. Of course my friends initially said they always sent the metal back to the bullion merchant who sold it to them, but RTC said they could better the price. So, of course my friends said they we welcome to send their agent to collect a bit of silver scrap they had.

The agent arrived, my friends gave her just over a kilogram of scrap sterling 925 silver, which they would have sold back to the bullion dealer for around £200 on account. On the high street, from any shop taking scrap metal, you can get between £160-180 for this amount of scrap 925 silver in cash on the spot. RTC said they would pay around £20 more than the bullion merchant - so it seemed a sensible deal to my friends, who had already told RTC twice about their existing deal with their bullion merchant - so there was no mistaking the money that was expected for the goods.

Great - so if you can get an extra 10% on your silver through RTC, what can yo get for your gold and platinum? My friends were naturally expecting a cheque for £220, approximately, but to their horror one arrived for £57.50. At first they thought it was a mistake, so they phoned the company - they got a brick wall at the receptionist who wouldn't pass them on saying that all queries had to be put in writing. My friends are persistent though, so they eventually got a manager of RTC to phone them back - he said the silver melted down to around 250 grammes and that is what they had paid out on. But there was over a kilogram to start with? So what has happened? RTC stood their ground, saying that there was only 250g of actual silver in the sample. So the money remained as is, and that was that. Put any complaints in writing. Blunt as that!

As a jeweller myself, I know this is not right. I told my friends that refining has several processes to get back to pure metal: firstly a burning off of all the non metal solid particles (dust, any plastic or paper in the sample, etc) typically losing 5-10% of the weight; secondly a higher burn to melt all metal solids, losing up to another 5-15% of weight and then a separation burn at a very high temperature to separate all the alloys - now this one can bring the weight of actual precious metal (in this case fine 99.9% silver) to 35% of its original weight. A quick calculation suggested that this had been the process used.

Why is this a scam you ask? Well, on the high street you can get instant cash for 925 silver scrap of £160-£180 per kilogram. This is because the bullion refiners don't have to go past the first burn to refine it. Therefore you are going to end up with about 950g payable scrap at worst from solids or perhaps 850g if its dust. RTC must know this as they are refiners. Usually a company like RTC would pick up metal waste from dentists and so on, where precious metals have been used in fillings and are mixed with non precious metals or other materials. This sort of refining needs the high prolonged burn. Still, I'm pretty sure that RTC wouldn't pass up on getting maybe £275 a kilo for 925 sterling silver from any of their colleagues who will just refine it and sell it back into the market at treble that ... c'mon ... wouldn't they? They should know their business shouldn't they? I'm sure they do!!!!

SCAM SCAM SCAM SCAM. RTC, you are the lowest of the low. worse than insurance companies by far - your industry is shrinking due to the recession so you are preying on the trades you reply on to pick up your sales and SCAMMING them, ripping them off and then not dealing with their complaints.

I have been since told by my friends that despite 3 letters to RTC, who it turns out are owned by a French parent company called Norphone have got them nowhere and now they are considering legal action, not for the money, which is only £150 or so, but for the principle. What if it would have been gold and not silver? Their losses could have been thousands.

Shame on you RTC, Recycling Trading Company, Norphone from New Bond Street !

The Nightmare on Norwich Union Street 3 - iVal returns

Call me Jack.

Again, we are back in Norwich Union Street. This time iVal got it soooooooo wrong.

A couple of years ago, a lady bought a necklace from us by a Danish designer. This designer isn't that well known, but her jewellery is quite exclusive and can be expensive. Its all hand made and mostly one off pieces. The item in question was a large natural pearl simply mounted in a 22ct gold bezel as a pendant and put on a long thick snake chain in silver. The purchase price would have been around £200. now, as a result of the strength of the Euro and increases in gold prices, a replacement would cost say £275-300 ... thats if we can get one for her from the designer. If we make one for her, it will be at least £225.

OK, so not alot of money in jewellery insurance terms, but enough for an individual - and of course, stolen. So Norwich Union pass this over to iVal who value it at £23.

C'mon iVal - this is totally unreasonable. £23 wouldn't even replace the chain, yet alone the gold bezel mounted pendant. When will these people get it right? And why don't they?

Well - it would seem that they have a conflict. A few posts back I asked who should be allowed to appraise jewellery for insurance. I said that any organisation with an affiliation to the insurance company was a conflict of interest to the customer - you would have though that anyone affiliated to the jeweller would be baised against the insurer (giving higher valuations to pass these on to their parent jeweller) ... iVal is actually part of Goldsmiths the high street jewellers.

So why is this such a mess?

The truth is, no-one has really got any control over the insurers. Oh yes, they have a code of conduct and are answerable to the FSA in some cases but that doesn't seem to count for much. Only today we received a note from our insurers saying that our premiums were going to increase due to more thefts and pay outs and the lack of police action when jewellery is stolen. The last time I looked we are all paying for not only the right to the police action when our things are stolen but also due care when things are valued for pay outs ... only we're not getting it - any of it!

The upshoot of all this is that the industry remains unregulated, unprofessional and full of thieves - not dissimilar to politics then, eh?

Scammers abroad

Call me Jack

OK. Before we carry on with our UK jewellery insurance issues, it is probably the right time now to expose a couple of other scammers. This does impact in jewellery insurance as unsuspecting tourists buy faked, treated or poor quality jewellery or loose stones whilst on holiday for top dollar and get ripped off in the process.

This fake jewellery can even come with some pretty convincing certificates which fool the majority of jewellers when they do their own appraisals for insurance. This is not their fault, the scammers are very clever and know how the industry works. The net result is you end up with a valuation of, say, several thousand for jewellery or stones which you paid a few thousand or even hundreds for.

How does this happen?

Well. We're not just talking about passing off a Cubic Zirconium costing a few pounds as a diamond costing a few thousand pounds, the scammers are experts in their field using advanced techniques to rip you off royally. Here is a few examples of how you can be hoodwinked into parting with your hand earned cash for trash.

1. Heat treated gems (sometimes normal commercial practice but watch out for diamonds)

Many coloured gemstones are sold on the intensity of their colour. The quality and cost of the stone is usually directly related to the desirability of its colour. In many cases, colour can be enhanced by "irradiating" the gem and in over 95% of cases it actually is - this is accepted as a normal commercial practice in jewellery and may not actually class as a scam, only nobody tells you. These heat treated gems are only actually worth a fraction of that which a naturally occurring gem of the same colour intensity would be. Expensive examples of these commonly include Fancy Diamonds, Rubies, Sapphires, Tanzanites (tanzanites are actually heat treated to get the blue colour - naturally they are brown - again, normal commercial practice) Aquamarine, etc. The treatment is usually permanent though it can deteriorate if it hasn't been done right. This is not only something which happens abroad, the majority of high street jewellers in the UK carry jewellery made with heat treated stones without making this clear (this refers to diamonds mostly) when you buy them so you think you are buying the real thing when you're not. Hey, you didn't really think you could buy real natural pink diamonds or sapphires for earnest Jones prices, did you?

2. Oiled gems (normal practice for certain stones such as emerald)

To hide surface flaws in poor quality gemstones which are all but worthless they can be "oiled". This treatment infuses a resin type substance into the flaws which covers them up. On polishing the treated stones, they mimic a higher quality stone than they actually are. This treatment is not generally permanent and is commonly used with Jade, Garnet, Emerald and so on - just to be clear, its normal practice to oil some stones, especially emeralds, though some treatments are better than others. If your garnets leak colour all over your skin when it gets hot or it rains, then you'll know that wasn't really the best oiling treatment that could have been used

3. Sandwiches

Two cheap stones glued together to make one larger much more expensive stone - this is a real fake and a total con. The resultant stone is worthless.

4. Laboratory grown

Literally these are the same gem composition os one occurring naturally, so its almost impossible to tell without going back to a lab for analysis. Any gem can be grown in a lab, faked if you like. They are actually what they say they are, only instead of taking millions of years to develop under a natural process, they have taken a few months under simulated conditions. Hence their values are much much less than a natural stone.

5. Poor quality stones

Most tourists are not well versed in determining good quality stones from poor quality stones. This is just experience, and you can easily be fobbed off with something which is not worth anything like the dealer claims.

These last 4 scams are most prevalent in China, Thailand, Mexico, India, and the like. But don't be lulled into a false sense of security if you are buying from the UK, Europe, US or Russia. To compound the problem MOST high street jewellers buy in goods or have their own brands made abroad in the very countries where these scams are absolutely rife. Half the time, the company has never even met the supplier or workshop they are using. I get to that in a later blog. They just trust that the supplier is giving them the right quality. Many of them don't even know what the right quality is - you are buying into their brand image and not a quality by merit.

To compound the problem still further, some unscrupulous jewellers produce fake certificates for this jewellery and then sell it at reduced prices to make it look like a bargain.

Watch out - there's a scam about.

The real jewellery insurance con

Call me Jack.

The long con; a term all of us should be familiar with.  For those who aren't, it means someone is prepared to invest a lot of time to con you in the long run.  The more I write this blog, the more I feel we're all part of a big long con called insurance; whether it be home insurance, car insurance, business insurance, life insurance ... the biggest con of all is jewellery insurance.

I've just had another example of this from a couple who came in today.  They were burgled last year and she lost all her jewellery.  Amongst other things that were special to her were two strings of pearls and a diamond eternity ring.  These items were insured by Barclays home insurance - the valuers were iVal, who this time did a good job in reaching a fair valuation of the claim.  Their insurance values were £3200 for a long string of pearls, around 40 inches long; £2200 for a double row necklace around 18 inches with a gold clasp; and £2500 for a channel set eternity ring with diamonds.  There were some other pieces as well, and they were fairly valued too reaching a total of around £9500 for the claim.

So Jack.  What's the problem?  Where's the con?  You ask.  Hmmmm ... where indeed.  this time, its in the replacements.

Barclays preferred jeweller was actually an internet based jewellery sales site.  They brought a selection of jewellery to the client, who chose replacements from these with the help and advice of the agent from the internet jewellers.  The only thing was, none of it was the same as what she had, so really she wasn't at all happy with it - but she had no choice but to take it under the terms of her contract.  There were no other alternatives made available.

They came to see us on recommendation to see if we could help with another piece still outstanding from the robbery, something which the preferred jeweller nor any other jeweller could help with.  We currently have that in hand.  While they were in the shop, they told us their jewellery insurance nightmare and showed us the other pieces.

To be honest - the long replacement string of pearls were on the money at £3200 - they were good quality akoya pearls ... but they were very poorly matched so they looked like a row of dull plastic balls.  OK, so they were expensive, but this is rather like having a bad Van Gogh - priceless but awful to look at.  As far as we can tell, her original strand was a long 60 inch large white freshwater pearl necklace - cheaper individual pearls, but much better matched, whiter, more uniform and of course the correct replacement.  The other pearls were well overpriced - we would have charged less than a thousand for better examples.  Both strings of pearls were strung hideously - no wonder the poor lady didn't want to wear them ... but now she was fobbed off with them and there was nothing she could do.  The eternity ring was OK, but the diamonds were again poorly matched.  On a later visit she told us that the ring should have been a much wider gold band with bigger diamonds, so this perhaps wasn't ever going to be replaced for the amount valued. The rest of the jewellery was supplied in the same way, again these were reasonable but not the quality of her stolen jewellery or suitable replacements.

Basically, the whole robbery experience had been gruesome for the couple and she was clearly very upset and not at all pleased with the replacements.  It could have been that the jewellery she lost was actually worth far far more than that of the replacements and the quality difference is clear to her - so the valuations were too low.  But we'll never know.

So why does this happen?  

Because the loss adjuster from the insurance company is not a jewellery expert.  Indeed, it would seem that the preferred jeweller has no idea either ... or they were just getting rid of some stuff they had lying around for a few years on the unsuspecting client when she was at a low ebb after the robbery.  This does rather beg the question why people are forced to use vouchers for a specific jewellers if that jeweller hasn't got what they want at all?  Its not what we're led to believe by the insurers in their advertising.  

Here's the horrible truth - if your small print states you have to use the insurance companies preferred jeweller, then there's no way out.  You can ask to use another jeweller or for a cash settlement, but they will only give you a proportion of your claim based on reductions for wear and tear and what they can get by buying in bulk from their preferred jeweller.  This isn't usually enough for you to replace like for like or old for new if you chose this cash settlement which, in our experience can be as little as one third of the estimated value of the vouchers.  Legally, there is no further recourse ... or is there?   This is a subject for another blog I think, but for now ...

Shame on you Barclays for using an online jewellery supplier and not a high quality high street jewellers and forcing your clients to accept things they don't want!

Jewellery insurance - Who should be approved to value jewellery for insurance purposes?

Call me Jack.

Jewellery valuation - what a crock!  The guys doing it at the moment generally have no idea.  So who should be able to carry out jewellery valuations for insurance purposes?  Let's list the possible bodies:

1.  The insurance company?  There would be a real conflict of interest here - so - not them or anyone on their payroll.

2.  A qualified gemologist?  This person should be employed in the process as they can accurately appraise the stone(s) in the jewellery.  But, whilst they may also have other skills or experience, they are primarily concerned with the quality of gems and perhaps have no idea of the value of them.

3.  A  jewellery maker?  This person would be able to tell you exactly how much it would cost to replace a piece a wholesale prices and would give you a quote to replace, in the same way you would get three quotes to replace windows in your house.  This is a fair appraisal of the wholesale value of the piece if you get three quotes assuming they are all providing the same quality of materials.  But, in general, they won't necessarity be able to tell you the value of antique, vintage or collectable jewellery or have experience in retail mark ups.  So they will play a part in my opinion.

4.  The retailer?  For standard pieces, like a standard design certificated 1 carat diamond ring.  Yes, they will be able to tell you exactly what THEY would replace this at.  So, again, the cheaper of three quotes would be acceptable.  But in the case of something they have no experience in, then unless they have another string to their bow, they are out of the picture entirely.  Also, the possibility of price ringing by the major chains is going to eliminate jewellers who are just retailers.

5.  A qualified valuation expert?  Well, you would have thought so, wouldn't you?  But read missmarketcrash's blog (link available on my gem of tanzania post) about this.  Often these people are not as highly qualified as you would expect and have no experience beyond their rather short training.  Yes, it could be said that their valuation is THE valuation, but in our experience (and we have several instances where we have vehemently disagreed), they can be all over the place when presented with less common items.  Please comment on this one.

6.  Antique  and vintage jewellery dealers?  Hmmm ... yes.  You will really find out how much they will pay for your piece, and they are surprisingly accurate amongst themselves as to what that piece is worth.  These people are really at the sharp end.  They know what they can get for the pieces so that defines their "worth" outside of the retail price.  But there it is, most insurers work with retail prices, so whilst in my opinion the value given by the dealers gives you a fair idea of the second hand trade price, it bears no relationship to a retail price charged on the high street.

7.  The jewellery historian.  Again, these people are not retailers - but some of them buy in their specialist area at full price from dealers in the trade - so they will know what these pieces are worth should you be lucky enough to be able to find one secondhand.  Then its a case of condition and so on.  So there will be a place for their expert advice in a valuation.

So who then can do all this?  Well, they don't really exist.  That's the problem.  I can only tell you how we do it.  Read on.

As a manufacturing jeweler in the UK who also retails, we know the cost to replace the components of the piece of jewellery and the amount of time chargeable to make it. We then come up with a "wholesale price" on that jewellery and then we apply a fair retail mark up and hey presto, you get a replacement value (in a fair market - perhaps if you went to Boodles then you would be paying more, but surely that's your choice as, despite the hallmark, the piece would likely NOT be worth more to your insurer than the replacement value of their preferred supplier when you walk out of the shop with it).  Also one member of our partnership is considered one of the most knowledgeable jewellery historians on the planet, so anything which has a value based not only in intrinsic components gets the fair increase befitting it.

I'm not saying this is perfect, but it should be a basis upon which to start this incredibly complicated process of valuing jewellery.

Jewellery Insurance - the nightmare in Norwich Union street 2 - Jack's revenge!

Call me Jack.

Following on from my last post about how much you should get for your insured jewellery loss - to summarise - my opinion was if your jewellery is insured for a certain amount then you are paying the premiums based on that amount and you should get exactly that if your valuation was accepted by the insurer.  Simple really ... but no, apparently not ever that simple.

Again, we had a run in with Norwich Union.  This time, it was a piece of jewellery which we had valued to around £6500 a few years before the loss.  We valued it the way we always do - see my who should be able to value jewellery post for that.  At the time they told us they were insured with Norwich Union and we did mention the problems of this type of insurer versus a specialist insurer such as T H March for example.

OK.  So our client was expecting to get offered £6500.  But Norwich Union had passed our detailed valuation on to a third party valuation service called iVal, who valued this piece just over one third of what we said it was.  Of course, the customer came back to us and questioned the validity of our valuation.  It was easy to get them to understand why, as when we tried to find the main stone we had to go abroad as none of the gem dealers had a replacement in the UK.  We did however get a wholesale price for the stone alone in writing and that came to around the same as what iVal had valued the whole piece at.

This we gave to the customer, with our quote for replacement of the whole piece by us at retail (several diamonds, the main stone, the metal and the work) which came to around 10% over the insured value carried out a few years previously by us.  As we didn't expect the insurance company to use us to replace the item (we are certainly not a preferred jeweller as far as the insurance companies are concerned) we didn't mind telling them exactly what our wholesale value was should we make it for another jeweller to sell at retail - which don't do any more, but we used to so we are well versed with the mechanics of other retailers and their mark ups.

Several months went by and we forgot about it.  Then one day the client returned and said they were still struggling with their insurance claim and could we take it up on their behalf.  We said we would and I phoned Norwich Union.  They had already passed this case on to a third party agent in this case, so I phoned them.  Once we had gotten past the I can't talk to you as you're not the client bit, I asked why their cash offer was so paltry.  The told me they had had two other replacement quotes including ours.  I said I wasn't aware we had submitted a replacement quote - of course the client had on our behalf so this was news to me.

The rather rude agent dealing with the case said we were 3 times as expensive as their nearest quote to replace.  I told him to hold on for a second - how was he valuing this piece, as he had our replacement valuation of the piece, he must also have the wholesale price of the stone from the dealer.  Silence.  "Er.  Yes" he said.  "But we have the full iVal appraisal and the quotes to remake like for like".

OK, so how did iVal appraise a piece they haven't even seen - my partner, the expert in this area, phoned them up and asked to speak to the valuer who had appraised the item.  The conversation was hilarious culminating with my partner asking if the valuer was actually a gemologist and knew the difference between an "x" version of this stone and a "y" version.  The valuer was stumped on both questions and refused to answer - we took that to mean she wasn't qualified to make this determination at all.  This was pointless.  We looked her up on their website.  She was in training.  Their website has mysteriously vanished at the time of writing this.

So, back to the third party agent in charge of the case.  "Who's going to make this at those prices then" I asked.  "Signet (H.Samuels, Ernest Jones) or Goldsmiths"  he said, gleefully, as if he'd scored a hatrick against me.  "Where?" I asked.  "Erm ... In their workshops".  His glee turned to gloom as I explained the facts about both these companies.  They, like many high street jewellers have all their manufacturing outsourced to the Far East.  "so you reckon the quality will be as good as the original made in the 1930's by an English jeweller then?"  I retorted.  "Well. Yes ...  Oh, I don't know I'm not the jeweller am I".  He knew he was defeated.

We ended up remaking the item for the client, at our wholesale price to the insurer. The client agreed to take a lesser value stone of the the same quality and slightly less diamonds of the same quality and to pay a proportion themselves to make up the value to something achievable.  They were happy with the result.  To be honest, we didn't really cover our time satisfactorily, but at least we scored a few points against the insurers.

Not really what you would call a complete victory, but nevertheless it got the point across that insurers were on a sticky wicket when it comes to these sorts of valuations and offers.  this was back in 2007.  In 2008 at the Loughborough Insurance Conference, these points were raised and it was informally agreed that forcing the clients to use only the preferred insurer is morally wrong but as yet not legally tested.  I'd like to think we had some influence on this, though judging from the number of incidents cited on the internet, our cases are few of many and still insurers pressurize customers into using preferred jewellers.  Here is a 2007 example on a forum

Shame, shame on you Norwich Union and iVal.

Jewellery insurance - how much is enough?

Call me Jack.

Here's something else which annoys me, those companies insuring "old for new" (check your policy wording).  Surely if you get a piece of jewellery appriased at, say, £5000 by a reputable and qualified NAG jewellery valuation expert, then if you lose your insured jewellery you should be offered your replacement at exactly £5000 if it can be replaced? (to my mind that means by finding another piece by the same jeweller to that value or having the piece remade by a jeweller of your choice; the insurance company paying exactly £5000 to that jeweller and you providing more funds if necessary).  

Lets say you can't replace this piece like for like as another does not exist. Then surely you're entitled to receive £5000 in cash if you decide that is what you want.  Perhaps you don't want to replace that piece of jewellery because it has sentimental value which can't be replaced, or that it was an antique piece, an heirloom, which you want to replace with something else.  The point is you paid the premiums for £5000, surely you should get £5000?  Am I being thick here?

Here's someone who subscribes to the insurer's way of thinking - click here to see it - Is he actually saying what I think he is? The high street jeweller is really selling you an item for £5000 when its actually only worth £1750 the next day as that is what the insurer will give you in cash if you don't accept their preferred jewelers vouchers? Oh, and that's OK cos the whole reduction idea is built into the premium? I think if its really like this guy says, which it appears to be, then what's the point of an insurance valuation or the insurance? Its clearly all a con! Somebody do let me know because I'm losing the will the live here!

More jewellery insurance scams by valuation experts

Call me Jack

Before I continue with my experiences, it has recently come to my attention that someone else has posted a good insurance scam story regarding an uncut gemstone called the "Gem of Tanzania" - a huge uncut ruby allegedly owned by a Derbyshire construction firm who have fallen foul of the credit crunch.

Said ruby has been valued at a staggering £11m making it the most expensive uncut ruby in the world.  Its value has actually balanced the books of the struggling firm making them solvent to the tune of approximately £6m.  But no-one can find it.  Save for an empty jar labelled with the words "Gem of Tanzania - do not throw out", there is no sign of it at all.  The directors swear blind they have sent it over to the liquidators and the liquidators deny having received it.

But never mind the earth shattering stupidity of all concerned in the loss of such a gem (c'mon, we all suspect skullduggery here), what about this valuation?  Bearing in mind that if the stone exists at all, will it really be able to bail out the company?  Read here for the real story of how a bad valuation can bring down a bank in these tough times. Also very interesting how Missmarketcrash became a certified gemologist too don't you think? I bet that fills you to the brim with confidence in your insurance valuations ;)

Jewellery Insurance - the nightmare in Norwich Union street

Call me Jack.  Heres one of our jewellery insurance nightmares - this time I'm going to name and shame.

A client of ours came to us in tears.  She had a silver wedding ring made by a collectible artist jeweller in the 70's, a one off piece, and it was lost.  She had insurance with Norwich Union, who were sympathetic with her but pointed her to their preferred jewellery valuers and replacement partners, Goldsmiths, who can be found on pretty much any high street.

She went to them, picture in hand with the name of the maker and a description of the ring.  They gave an independent valuation of this ring at £10 (yes, you read it right - ten pounds).  Now, you might be able to buy a silver ring off the market for a tenner.  You may even be able to go to some shops and get one.  But I can assure you that you wouldn't be able to pick up any ring in any metal second hand by this highly collectible artist for less than £400.  However, both Goldsmiths and Norwich Union were completely immovable, and offered only a silver wedding band from their range at around £60-80 as a replacement.

Following over a year of battling with Norwich Union and Goldsmiths, she finally gave up and came to us.  We wrote to Norwich Union on her behalf, who promptly wrote back consolidating their position - this ring was only worth what Goldsmiths had valued it at, so she could only choose a ring from them to the rather generous value they had offered as a replacement.

We, of course, wrote back with several examples of prices of this artists work, and indeed even a quote from the artist to replace this ring, which the artist clearly remembered making as they had a nice picture on file.  The price was over £1000.  Still Norwich Union did not budge, until the client threatened legal action - then they were all of a sudden more reasonable, a new ring was commissioned and our client was at last happy, even though she had to endure over a year's worth of stress and disappointment at the hands of Norwich Union and their preferred partner, Goldsmiths.  Shame on you both!!

Is this uncommon?  It would appear not.  We have intervened on several cases involving Norwich Union.  So, what's the problem?  Why won't they replace like for like?  Well, you'd hope that Goldsmiths would know what they are doing, wouldn't you?  But the fact is, neither insurance company nor preferred jewellers have any idea of the value of quality, designer maker jewellery (I don't mean Gucci, Bulgari or Tiffany - I mean highly collectible non production line jewellery by celebrated innovators of the craft).  Goldsmiths and many other high street brands, whilst producing reasonable quality jewellery, have all their stock made abroad - yes, cheaper labour costs in the Far East and the likes.  Shiny stuff - no interesting surface textures or individuality, plain, featureless, one of many copies, but functional ... and only really worth the intrinsic value of the components used in its manufacture after you have walked out of the shop with the bag.  I don't want to belittle anyone who likes this kind of jewellery - its important that everyone be happy with their jewellery and of all the high street brands Goldsmiths are one of the better ones.  Neither am I trashing Goldsmiths' reputation here, I am simply relaying an event where their experience falls well short of the acceptable mark and explaining why.

Anyway, that's the key - the intrinsic value of the components; which in the case of our clients silver ring was a tenner, including the cost of the metal, the carriage, the labour and of course the dreaded VAT.  The rest, of course, is what we in the trade call mark up.  I'll leave that to your imagination.  And why don't these Insurance companies just let you choose which company or shop you would like to use to replace your loss?  Because the preferred jeweller is giving them a preferred price.

The moral of the story?  CHECK YOUR POLICY WORDING.  Some insurance companies are still forcing this on their customers even though it is not considered morally correct any more.  You can force them to give you cash, but usually this will be a reduced offering based on age and wear and tear of the piece - hence the valuation at £10 in our example above.  So much for "old for new" then.  Watch out, there's a scam about!

I'll tell you another one in the next post.

Jewellery Insurance - the nightmare begins

Call me Jack

Last time we talked about how to get your jewellery valued for insurance and the problems associated with these valuations - to get the full story, its going to be a bit lengthy, so bear with me.  I mentioned the fees that might be involved to get this valuation.  Here's an example

We had a customer in our shop in 2005 who had a ring valued by another local jeweller.  This ring was Georgian, so around 200 years old.  It had a centre diamond of around 0.8 carats and 7 flanking diamonds set in a cluster around 0.35 carats each - approximate total diamond carat weight of around 3cts.  The metal was platinum.  She wanted to sell it and was looking for £6000 cash because the other jeweller had valued it at £11,800.  We could only offer her £1500.

When asked why, we told her the ring was a "marriage" between two ring styles, the original Georgian base and a complete mess of a repair perhaps carried out in the early 20th Century.  Whilst the centre diamond was likely original, all the other diamonds had been replaced during the life of the ring with extremely poor quality mixed cut diamonds.  If the ring had been pristine, it might have been worth around £10-12,000 at auction, but in its current condition, it might not even have made £2000 at auction.  She, of course didn't accept this offer and was really annoyed and upset when she left (no doubt blaming us and not the other jeweller).  So why did the other jeweller value the ring like he did?

The answer is simple.  When you value a piece of jewellery, it shouldn't be a case of just taking 5 minutes looking at hallmarks or stones and coming up with a figure.  There is a certain amount of research into the piece.  Sometimes this is quite easy, using the internet to compare prices and trade tools like the Rapaport diamond report (up to date wholesale diamond price list) and then your knowledge to identify pieces as to what age they are, etc.  You might need to take photographs, etc as well and write a full report for the customer if the item is rare or collectible or has an intricate design which can't be described.  

Here's the nitty gritty - A valuation takes anywhere between 40 minutes for a new piece of jewellery and 5 hours of actual work and maybe even a few months of down time waiting for information  for really complicated valuations.  The average cost per piece is a minimum of approx £50-70 + VAT as of time of writing (2009).  For most pieces, especially really expensive pieces, the valuer usually wants this fee and up to 2% of the value placed on the item.  In fact, many unscrupulous jewellers will simply charge 1% of the value of the item with a minimum of whatever their hourly rate is, say £55 - or they may send it to a valuation expert, NAG (National Association of Goldsmiths) qualified who will charge them, and then they add their, say, 1% of the value + a nominal fee.  Basically what I'm trying to say is there are no rules or guidelines.  As long as the jeweller is insured to do valuations, then they don't need any experience or knowledge to do them, just a piece of paper and a pen.

So, back to our example of the poor unsuspecting member of the public who got scammed by the other local jeweller.  It might have been that he didn't know the ring was a complete mess and had no value beyond the components at scrap, but we doubt that very much.  He saw an opportunity to charge 1% of the value of the item instead of a minimum charge which should have been levied.  He charged her £150 + VAT for the valuation, which was simply a one paragraph statement (no picture and no provenance) and the value simply stated as "antique".  We would not have taken the work on in good conscience as we know the value of the ring did not need to be appraised at all - just estimated which we would have done verbally for free with an explanation as to why.  The most we charge for single straight forward valuations is £70 + VAT. This is in line with current NAG experts.  No naming and shaming here as its too close to home, but needless to say this isn't the only valuation we've seen from this jeweller which is well inflated.  How can an insurance company insure a piece of jewellery valued by this jeweller?  But they do - and then you are over-insured and paying the premium for that.

The second example is that of pieces that have been made by a jeweller who is now very collectable or important for whatever reason.  We had another customer in the shop who had lost her wedding ring, a silver one, made by a renowned artist jeweller who had won several awards.  The ring had never had a valuation certificate and had been bought some 30 years ago for £45.  She had the name of the jeweller and a good picture.  We identified the piece as being definitely in the style of this jeweller, who we knew personally, so we were surprised when we discovered that the insurer had offered £10 only for a replacement (in Goldsmiths), especially since a silver ring by this jeweller was now worth well over £1000.  As the lady in question was very upset by this situation, we decided to intervene and we called the jeweller and asked if she would make another ring for the client, who had lost hers.  She was no longer officially working, but she said she would do it as a favour to us.  The cost of the ring at trade was some £900, we added a nominal fee for our time and the insurance was forced to comply as the lady was insured to £1000 for non specified losses.  Just as an update, sadly we have now lost this celebrated artist and her pieces are now fetching £3000-4000 at auction, so any valuation would have to reflect this.  Of course, at the time this ring was actually covered by her no specified items cover, but now it would have to be specified and there can be no direct replacement for the ring as it is a one off piece, so the fact that it is irreplaceable may be something she would want to be properly insured for.

When valuing anything, knowledge is king.  If you take your antiques to the antiques roadshow, generally they know something about what you have as they have several experts in specific fields who can advise on what they are and how much they will get at auction for something similar.  Jewellery is usually a more complex genre where there are several experts in single disciplines who may need to be involved to value one piece so a valuation can require more than one opinion or someone with a deep and broad experience.

The moral of this story is - 99% of high street jewellers have no place in valuing items for insurance purposes or otherwise.  Often an antiques centre will do a better job in 5 minutes because they will actually offer you a price for the item on the spot AND you won't get charged for that information.  Now there are no guarantees unless you get the item appraised properly ... but even that is a real issue, as often the NAG approved valuers often get this wrong on complicated pieces.  So the basis for insuring jewellery in this country is flawed at the most basic level and its you, the public, that suffer.

You will find more examples like these on this blog.

Jewellery Insurance - the nightmare begins

Call me Jack

Last time we talked about how to get your jewellery valued for insurance and the problems associated with these valuations - to get the full story, its going to be a bit lengthy, so bear with me.  I mentioned the fees that might be involved to get this valuation.  Here's an example

We had a customer in our shop in 2005 who had a ring valued by another local jeweller.  This ring was Georgian, so around 200 years old.  It had a centre diamond of around 0.8 carats and 7 flanking diamonds set in a cluster around 0.35 carats each - approximate total diamond carat weight of around 3cts.  The metal was platinum.  She wanted to sell it and was looking for £6000 cash because the other jeweller had valued it at £11,800.  We could only offer her £1500.

When asked why, we told her the ring was a "marriage" between two ring styles, the original Georgian base and a complete mess of a repair perhaps carried out in the early 20th Century.  Whilst the centre diamond was likely original, all the other diamonds had been replaced during the life of the ring with extremely poor quality mixed cut diamonds.  If the ring had been pristine, it might have been worth around £10-12,000 at auction, but in its current condition, it might not even have made £2000 at auction.  She, of course didn't accept this offer and was really annoyed and upset when she left (no doubt blaming us and not the other jeweller).  So why did the other jeweller value the ring like he did?

The answer is simple.  When you value a piece of jewellery, it shouldn't be a case of just taking 5 minutes looking at hallmarks or stones and coming up with a figure.  There is a certain amount of research into the piece.  Sometimes this is quite easy, using the internet to compare prices and trade tools like the Rapaport diamond report (up to date wholesale diamond price list) and then your knowledge to identify pieces as to what age they are, etc.  You might need to take photographs, etc as well and write a full report for the customer if the item is rare or collectible or has an intricate design which can't be described.  

Here's the nitty gritty - A valuation takes anywhere between 40 minutes for a new piece of jewellery and 5 hours of actual work and maybe even a few months of down time waiting for information  for really complicated valuations.  The average cost per piece is a minimum of approx £50-70 + VAT as of time of writing (2009).  For most pieces, especially really expensive pieces, the valuer usually wants this fee and up to 2% of the value placed on the item.  In fact, many unscrupulous jewellers will simply charge 1% of the value of the item with a minimum of whatever their hourly rate is, say £55 - or they may send it to a valuation expert, NAG (National Association of Goldsmiths) qualified who will charge them, and then they add their, say, 1% of the value + a nominal fee.  Basically what I'm trying to say is there are no rules or guidelines.  As long as the jeweller is insured to do valuations, then they don't need any experience or knowledge to do them, just a piece of paper and a pen.

So, back to our example of the poor unsuspecting member of the public who got scammed by the other local jeweller.  It might have been that he didn't know the ring was a complete mess and had no value beyond the components at scrap, but we doubt that very much.  He saw an opportunity to charge 1% of the value of the item instead of a minimum charge which should have been levied.  He charged her £150 + VAT for the valuation, which was simply a one paragraph statement (no picture and no provenance) and the value simply stated as "antique".  We would not have taken the work on in good conscience as we know the value of the ring did not need to be appraised at all - just estimated which we would have done verbally for free with an explanation as to why.  The most we charge for single straight forward valuations is £70 + VAT. This is in line with current NAG experts.  No naming and shaming here as its too close to home, but needless to say this isn't the only valuation we've seen from this jeweller which is well inflated.  How can an insurance company insure a piece of jewellery valued by this jeweller?  But they do - and then you are over-insured and paying the premium for that.

The second example is that of pieces that have been made by a jeweller who is now very collectable or important for whatever reason.  We had another customer in the shop who had lost her wedding ring, a silver one, made by a renowned artist jeweller who had won several awards.  The ring had never had a valuation certificate and had been bought some 30 years ago for £45.  She had the name of the jeweller and a good picture.  We identified the piece as being definitely in the style of this jeweller, who we knew personally, so we were surprised when we discovered that the insurer had offered £10 only for a replacement (in Goldsmiths), especially since a silver ring by this jeweller was now worth well over £1000.  As the lady in question was very upset by this situation, we decided to intervene and we called the jeweller and asked if she would make another ring for the client, who had lost hers.  She was no longer officially working, but she said she would do it as a favour to us.  The cost of the ring at trade was some £900, we added a nominal fee for our time and the insurance was forced to comply as the lady was insured to £1000 for non specified losses.  Just as an update, sadly we have now lost this celebrated artist and her pieces are now fetching £3000-4000 at auction, so any valuation would have to reflect this.  Of course, at the time this ring was actually covered by her no specified items cover, but now it would have to be specified and there can be no direct replacement for the ring as it is a one off piece, so the fact that it is irreplaceable may be something she would want to be properly insured for.

When valuing anything, knowledge is king.  If you take your antiques to the antiques roadshow, generally they know something about what you have as they have several experts in specific fields who can advise on what they are and how much they will get at auction for something similar.  Jewellery is usually a more complex genre where there are several experts in single disciplines who may need to be involved to value one piece so a valuation can require more than one opinion or someone with a deep and broad experience.

The moral of this story is - 99% of high street jewellers have no place in valuing items for insurance purposes or otherwise.  Often an antiques centre will do a better job in 5 minutes because they will actually offer you a price for the item on the spot AND you won't get charged for that information.  Now there are no guarantees unless you get the item appraised properly ... but even that is a real issue, as often the NAG approved valuers often get this wrong on complicated pieces.  So the basis for insuring jewellery in this country is flawed at the most basic level and its you, the public, that suffer.

You will find more examples like these on this blog.

Jewellery Insurance - is it worth it? Or is it a scam?

Call me Jack.

Most people think that if they insure their jewellery "all risks" as a named item on their home insurance, then everything will be hunky dory.  I'm sure there are a lot of cases where this is OK, but we have been involved with sorting out some real insurance nightmares.  I'd like to talk about some of those this week.  And yes, we will be naming and shaming where appropriate.  Before I share these experiences with you though, I'm going to give you a brief summary of what happens when you get your jewellery insured.

As a small specialist shop with a wealth of experience in making all sorts of jewellery, we do have quite a few people coming in to ask us for insurance valuations.  Of course, you can go to any jewellers and ask for insurance valuations and they will happily carry that out for you from their experience of being in jewellery retail.  To be honest, if the item you bring in is within their scope, like a gold ring or a watch, then there shouldn't be any problem at all with their assessment of its value.  Or maybe you have purchased something and you have the receipt and perhaps even a certificate of value but you didn't take out any insurance from the jeweller (we'll get to these later) as you were going to insure with your own insurer.

So, you have your valuation done and you are charged their fee (we'll come to fees later as well) - then you go home and phone your insurer, who is generally quite pleased to charge you an additional premium for insuring your new or valued jewellery.  Do they ask who did the valuation or expect a copy of the receipt/valuation?  Rarely.  Its usually up to you to keep those safe and make sure they are accurate so you are not under or over insured.  We wouldn't want to be charging you too much for your premium on your over insured jewellery now would we?  Clearly not - they wouldn't do that ... or would they?

The answer to that would seem to be a resounding "YES".  Non specialist insurers are perfectly happy to charge you ridiculous premiums for seriously over-insured jewellery and then pay out less than the insured amount because its over insured.  Likewise, they are also happy to let you go under-insured as well - but check out your small print, because this could constitute an acceptance that you are prepared to take on a percentage of the risk yourself, so subsequent pay outs are capped or reduced by the percentage under-insured you are. 

How do they come up with this evaluation of your insured loss after you have lost it you ask?  Well, that's easy.  They have those really experienced "loss assessors" don't they!  You know, those guys and gals that can value a tiny item from your description of it, or a photo of you on the beach wearing it, or the handwritten one line valuation that you paid your local jeweller to do for you saying "18 carat gold diamond ring of good quality - 0.75 carat diamond with excellent colour - replacement value £9750" (yes, we have seen these valuations).  "Ah Ha!" They say.  This ring is valued by our qualified NAG (National Association of Goldsmiths) valuation expert at £3750, so we'll offer you that in cash because its over insured - or we can give you £5000 vouchers to spend in X jewellers cos we're feeling generous and you have been rather silly now, haven't you?  Tsht!  £9750, how can it be worth that?

AAAAAAAAAAARRRRRRRRGGGGGGGHHHHHHHH!!  Your screams can be heard for miles.  How could this happen to me?  I'll explain in the next installment - and then I'll name and shame with examples of some we've seen

UK Jewellery Scammers - time to name and shame

Call me Jack.  I'm a bespoke jeweller in a small town in the UK where I have a shop in the high street.  We are one of the few remaining jewellery manufacturers and we specialize in pearls and rare precious and semi-precious stones and have over 30 years experience in making and valuation of all jewellery.  Additionally, my partner is considered one of the foremost authorities in the field of jewellery history.

So, what prompted me to write this blog?  Its not actually to promote us in any way and the mere fact that I want to remain anonymous is because what I'm about to reveal to the unsuspecting British public would likely get me blacklisted from every jewellery association in the country;  a bit like the "masked magician", if anyone has seen that.

But I don't feel this should be kept under wraps any longer.  Not that I should care what they think - we don't base our business on ripping off our customers, so it probably wouldn't matter that much - still, I like to be anonymous - it gives me a kind of ghostly leverage over those who seek to swindle and perform atrocious acts of daylight robbery.

Thats enough of me.  So what am I talking about?  Jewellery of course, in the more general sense, moreover knowledge and jargon - the science that blinds the public into buying expensive stuff that is way overpriced from high street chains, independent shops, e-shops or even market traders just because the guy behind the counter knows a bit more about the jargon and hides behind a facade of trade secrets that make you, the customer, totally vulnerable to being taken in and sold goods that are simply not worth 5% of what you have paid for them.  

Even huge, reputable (we all assume they are) companies get involved in this terrible mis-selling ... though I suppose I can't be sure they really understand that they are at the root of these dreadful acts as they themselves may be taken in - but I am sure they know a good deal when they get one and they are benefitting from your misfortune at the hands of unscrupulous rip off merchants in posh suits and very expensive shop fits.

These are the "rogue traders" of the jewellery profession and I'm going to name and shame if I find evidence of deceit.  Watch this space!!