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 ;)