February 2009

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


What's a Certified Appraiser? - January

Best Appraiser Credentials - February

Are the diamonds you’re insuring real? - March

Handwritten Appraisals - April


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

FRAUD UPDATE – lack of disclosure, false inscriptions & doctored docs - December


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


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


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


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


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


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


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


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


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


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


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


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

Grading the Color of Colored Diamonds

New GIA Cut Grade for Diamonds - December


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


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


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


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


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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Turning Jewelry into Cash—
Strategy in a Bad Economy

The economy is shaky these days. Retail business is down, consumers are worried about their jobs and have less to spend. Everyone’s looking for ways to cut costs and stay solvent.

How does this affect insurers? The short answer is: more fraud. When times are tough, more people tend to bend the rules.

A study by Accenture, the world’s largest business consulting management company, examined consumers’ attitudes toward insurance fraud. It found that 25% of the respondents thought a false insurance claim or overstating a claim was acceptable. That study was in 2003. In today’s economy, we could expect worse results.

People condone fraud either because they think insurance companies charge too much or simply because they think they can get away with it. With cars, for example, a person can drive the car to an airport parking lot and report it stolen. Weeks might pass before the car is found. In a state that has a constructive total loss law, burning down the house is an attractive deception. With jewelry, declaring a false loss is pretty easy.

A partner in Accenture’s Insurance practice said, “Fraud is a growing concern for insurers, whose aging technology and inefficient processes often prevent them from detecting fraudulent claims.”  

It’s time to get our fraud-detecting tools and processes in order!

Selling Price: $86,999.99
Valuation: $183,995.00

Inflated valuations are all too common.

Some jewelry retailers are finding that business is down 30% or more. An unethical jeweler may decide to do customers a favor by giving them insurance valuations well beyond the selling price. This is likely to result in return business from these customers, who feel they’re being taken care of.

There are also many jewelry outlets that regularly advertise “50% off!” the regular selling price, and they substantiate the bargain by accompanying each purchase with an inflated appraisal. Oddly enough, many customers readily take the seller’s word about the “real” value of the jewelry, despite the low price offered to them. Insurers should be more aware and more skeptical. 

An inflated valuation creates a serious moral hazard, a false loss waiting to happen.

Your anti-fraud tool: Compare the appraisal’s valuation with the sales receipt. If the valuation is significantly higher than the sale price, that valuation is likely to be inflated. Ask for an appraisal from a Graduate Gemologist (GG), preferably one who is also a Certified Insurance Appraiser™ (CIA).

Who says it’s a certified diamond?

Not all labs issuing diamond reports are trustworthy. Some are known to write inflated appraisals, exaggerating both the quality of the jewelry and the valuation.

Your anti-fraud tool: The most reliable labs for certifying diamonds and colored gems are GIA (Gemological Institute of America), AGS Lab  (American Gem Society Lab), and GCAL (Gem Certification & Assurance Lab) For high-value gems, insist on a report from one of these labs.  

Watch those watches.

There is a huge trade in fake watches. A high-end watch not sold through an authorized dealer for that brand is considered second-hand at best, and may be just a knock-off. There’s also a huge market in counterfeit watch parts. All parts must be genuine for that brand, in order for the watch to be considered authentic (and to have the value of an authentic brand-name watch).

Appraising fine watches is not within the competence of all jewelers. One must be trained to judge the authenticity of the watch and all its parts, recognizing non-authorized “after market” add-ons as well as out-and-out fakes.

Your anti-fraud tool: Be sure the appraisal is done by a dealer trained to authenticate that brand, or by a Certified Insurance Appraiser™, who has the resources for obtaining proper authentication.

Red Flag: purchases from internet sites, on home shopping channels,  or during travel abroad.

Such purchases are often impulse buys. The buyer has not comparison-shopped, and most likely has not had the jewelry independently appraised to verify its quality and value.

This merchandise is often low quality but advertised—and “certified”—as high quality. It may come with an appraisal or report carrying a high valuation.  If you insure it at the falsely high valuation, and the consumer later finds out it is worth far less, he may be tempted to “lose” the jewelry.

Your anti-fraud tool: Ask for an appraisal from an disinterested jeweler/appraiser (i.e., not the seller).

Who is this appraiser?

Literally anyone can call himself a jeweler and write an appraisal. No training or credential is required. Jewelers can even run businesses for years and still be unable to tell real diamond from fake, as shown in this Dateline exposé. So why should you automatically trust whatever appraisal and valuation are in front of you?

Your anti-fraud tool: Ask for a detailed appraisal written by a Graduate Gemologist (GG), preferably one who is also a Certified Insurance Appraiser™ (CIA).

Red Flag: investment gems sold by mail.

Sometimes the insurer is an unintended victim of a scam—the buyer is the intended victim. In one mail order fraud, rubies were sold as investments, guaranteed to appreciate in value. The gems were securely wrapped in a transparent material to “protect the investment.” Keeping them wrapped also meant the gems couldn’t be inspected by an independent appraiser. The insurer (like the buyer) would be taking the word of the scam artist as to the gems’ value.

Often a tip-off that a mail-order deal is shady is that the merchandise is mailed from outside the U.S. It’s a good guess someone wants to avoid being charged with mail fraud.

Your anti-fraud tool: Be especially cautious about jewelry that has been bought sight-unseen or “for investment.” Insist that the quality of the gems be verified by a reliable, disinterested appraiser who is a GG and preferably also a CIA™.

Are you being set up for a loss?

The same scams are used over and over—only the characters and the settings change. One of these recycled scams involved almost worthless stones valued at $160 million, which the customer wanted to insure under a valued contract. If one of the stones went “missing,” the cost to the insurer would be tremendous. And that’s the likely intent.

We’ve been contacted regarding half a dozen versions of this scam in the past few months, always involving loose gems, stored in a vault, with values ranging from $12 million to $1.2 billion. The premiums would, of course, be very high.

An alternative explanation is that this is a money-laundrying scheme. The policyholder puts up the premium for a year, then cancels after the first month and gets back 90% of his payment in clean money. Whether the goal is a “missing” stone settlement or a refund from a cancelled contract, you want to avoid this fraud.

Your anti-fraud tool: For any high-value Agreed Amount contract, insist on a detailed appraisal on the insurance industry’s standard JISO 78/79 form, written by a Graduate Gemologist (GG) who is also a Certified Insurance Appraiser™ (CIA).

How good is the appraisal?

You’re probably not a gemologist so you can’t tell. Lots of appraisals that look impressive are not at all complete.

Your anti-fraud tool: JISO 18 Jewelry Appraisal and Claim Evaluation. This form lets you “unpack” an appraisal into a standardized format, so you can see if all the necessary details are given. There’s no assurance that the details are correct, but the layout allows you to see whether information has been left out—perhaps because the jeweler doesn’t know, or because he is deliberately concealing low quality. If too much info is missing, ask the client to get an appraisal on JISO 806.

Your Ultimate Best-Case Scenario Anti-Fraud Tool:

JISO 78/79 Jewelry Insurance Appraisal. You can protect yourself from most scams by getting a JISO appraisal, prepared by a GG who is also CIA.


This newsletter dealt with a few general scams to guard against. Future newsletters will zero in on protecting yourself from fraud regarding Diamond Treatments, Lab Reports & Appraisals, and Colored Stones.


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