Salvage Jewelry
Some insurance companies have quite a bit of jewelry squirreled away in their vaults. They find it difficult to sell jewelry and gemstones. They usually just stockpile them.
That's how one jeweler described things, according to National Jeweler, a prominent trade publication of the jewelry industry. That jeweler said calling on local claims offices is a bargain-hunter's dream and he would do it all day if he didn't have a store to run.
Perhaps your company paid out money on a piece that was lost, only to have it turn up a few weeks later. Maybe a policyholder's jewelry was damaged, you ordered a replacement and took possession of the damaged piece. What's to be done with this jewelry? If it's damaged, is it worth anything at all?
Damaged jewelry can still be valuable. One jeweler paid an insurance company $3,000 for a 2-carat marquise diamond that turned out to be worth $8,000. That recovery could have been the insurer's.
Not being a jewelry expert, how can an insurer know the value of this salvage jewelry? How can you bargain with a jeweler?
The best way to deal with salvage is by competitive bids. Don't wait for a jeweler to contact you — call the jewelers you deal with and ask if they want to bid on your salvage. Don't accept the first offer you hear — compare offers. Never allow a jeweler who says "Oops, it's chipped" to determine the value as salvage — get competitive bids.
FOR AGENTS & UNDERWRITING
Besides recovering some of your losses, salvage jewelry offers the opportunity to check the accuracy of your information on file and to measure the honesty and competence of jewelers on whom you depend. If an inspection of a salvage gem shows the original appraisal was inaccurate, it might be worthwhile getting new appraisals for other scheduled items appraised by the same jeweler. Keep a record of jewelers whose appraisals were bad. When their names come up in the future, you'll probably want to have the jewelry examined by an independent jeweler, such as a CIA™, before accepting the valuation
FOR CLAIMS
Have all damaged gems inspected by a trained jeweler, such as a CIA™, in a gem lab. Have the jeweler provide you with a complete description of the gem's qualities. Basically, this means providing the descriptive content of an ACORD >78/79 appraisal, but without the valuation. This description, along with a photograph of the jewelry, can be sent out for bids. When offering jewelry for bids, do not include information such as the original valuation, where the jewelry was purchased, or the selling price. Give the jeweler only descriptive information and a photo.
Once you have valued the jewelry, consider offering it to the insured. It may have sentimental value. Consider having a chipped stone repaired and offering it to your company's employees. Even with the cost of the repair, the salvage would be only a fraction of what they would pay in a retail store and this could constitute a handsome fringe benefit. Or, offer it to the highest bidding jeweler.
Check the description from the inspection against the original appraisal for accuracy, and report problematic appraisers to underwriting.
CIA™ Corner
From Brent McMaster, CIA™:
Occasionally insurers we've worked with call and say, "What do I do with this chipped stone?" Sometimes they assume that, because the jewelry is damaged, it's worth nothing. Usually the stone can be repaired. We discuss how much value the jewelry has lost and what repairs might be done to improve its value. I'm able to recommend resources for repairing, repolishing, refurbishing or recutting a stone.
Basically, we act as intermediaries — inspecting the damage, giving suggestions and resources for improvement, perhaps even handling the shipping, and setting a valuation. It's not a money-making activity for us; we do it primarily as a service for insurers with whom we do business, charging them only for our costs. How the insurers deal with the jewelry afterwards is up to them, but at least they have a stone that's worth more because it's not compromised.
Brent McMaster
O.C. Tanner
20 East South Temple
Salt Lake City, Utah 84111
801.532-3222
©2000, JCRS Inland Marine Solutions, Inc. All Rights Reserved. www.jcrs.com
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