October 2000

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

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Jewelry Insurance Issues

Table of Contents

Click on article titles in red

2017

Moral Hazard, Documents and the Bottom Line - January

Ruby and Jade - February

How to mail a diamond - March

Jewelry Insurance Appraisal Standards: JISO - April

Describing a gem's color - May

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

GIA Diamond Reports - July

Not just a pretty face - August

2016

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

Clarity Enhancements v. Inherent Vice - February

How green is my emerald? - March

Cruise Jewelry - What's the problem? - April

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

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

Are you sure her wedding jewelry is covered? - July

What Affects Jewelry Valuation? - August

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

Bigger & Bigger Diamonds - October

Scam season is always NOW - November

Ocean Diamonds - December

2015

Pair & Set Jewelry Claims and the Accidental Tourist - January

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

Vacation Jewelry – Insurer beware! - March

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

Why you should read that appraisal - May

Smoking Gun! - June

Color-Grading Diamond: the Master Stones - July

Padparadscha—a special term for a special stone - August

Jewelry Appraisal Fees - September

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

Diamond camouflage and how to see through it - November

GIA Hacked! - December

2014

Who Grades? - January

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

Credential Conundrum - March

Frankenwatches - April

Fakes, fakes, and more fakes - May

Marketing Confusion — What is this gem anyway? - June

12 Reasons Not to Insure a Rolex! - July

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

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

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

The Doublet Masquerade - November

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

2013

Wedding Rings on HO? NO! - January

Silver: the new gold - February

Point Protection - March

Tiffany v. Costco - April

What counts in valuing a diamond? - May

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

A Cutting Question concerning vintage diamonds - July

Synthesized Diamonds - Scam update - August

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

Preventing jewelry losses - October

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

Synthetics in the Mix - December

2012

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

Whose Diamond? - February

Appraisal Inflation - It Keeps On Keeping On - March

Big Emerald - April

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

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

Appraiser's Dream Contest - July

GIA & the Magic of Certificates - August

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

Fooling With Gold - October

Tanzanite – December's stone - November

Branding Diamonds - What do those names mean? - December

2011

Unappraisable Jewelry - January

Replicas - Are they the real thing? - February

Composite Rubies- From bad to worse - March

Jewelry Hallmark - A Well-Kept Secret - April

Non-Disclosure: Following a Trail of Deception - May

Preserving the Diamond Dream - June

Spinel in the Spotlight - July

Jewelry 24/7 - Electronic Shopping - August

Diamond Bubble? - September

Disclosure: HPHT - October

"Hearts & Arrows" Diamonds - November

How a Gem Lab Looks at Diamonds - December

2010

Emeralds - And What They Include - January

Pink Diamonds: From Astronomical to Affordable - February

Palladium-the Other Precious White Metal - March

Bridal Jewelry - April

The Corundum Spectrum - May

How Photos Cut Fraud - and help the insured - June

The Price of Fad - July

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

EightStar Diamonds-Beyond Ideal - September

The Hazard of Fakes - October

Jewelry with a Story - November

Counterfeit Watches - December

2009

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

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

Enhancing the Stone - March

Being Certain about the Cert - April

Every Picture Tells a Story - May

Color-Grading Diamonds - June

The Newest Diamond Substitute - July

What Happens to Stolen Jewelry - August

Jewelry As an Investment - September

Black Diamond: Paradox of a Gem - October

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

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

2008

Garnet - and Its Many Incarnations - January

Organic Gems - February

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

Don't Be Duped by Fake JISO Appraisal - April

Diamonds in the Rough - May

The Cultured Club - June

Sapphire-Gem Superstar - July

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

FTC Decides: Culture Is In! - September

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

How Fancy is Brown? - November

CZ – The Great Pretender - December

2007

Moissanite's New Spin - January

Online Jewelry - Buying and Insuring - February

Blood Diamonds - March

Damaged Jewelry, Don't Assume!- April

Chocolate Pearls - May

Appraisal Puff-Up vs Useful Appraisal - June

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

Diamonds Wear Coats of Many Colors - August

DANGER! eBay Jewelry "Bargains" - September

TV Shopping for Jewelry - October

Enhanced Emerald: clever coverup - November

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

2006

The New Platinum: A Story of Alloys - January

Ruby Ruse - February

How Big are Diamonds Anyway? - March

GIA Diamond Scandal
Has Silver Lining for Insurers
- April

Watch Out for Big-Box Retailers Insurance Appraisals - May

Mixing It Up: Natural and Synthetic Diamonds Together - June

Tanzanite - Warning: Fragile - July

Red Diamonds - August

Inflated Valuations & Questionable Certificates - September

Emeralds - October

Where Do Real Diamonds Come From? - November

Counterfeit Watches - The Mushroom War - December

2005

The Lure of Colored Diamonds - January

Synthetic Colored Diamonds - February

Watches: What to Watch for - March

When is a Pear not a Pair? - April

The Truth About Topaz - May

White Gold: How White is White? - June

One of a Kind - or Not - July

Jewelry in Disguise - August

Valued Contract for Jewelry? Proceed with Caution! - September

Antiques, Replicas and All Their Cousins
October

Grading the Color of Colored Diamonds
November

New GIA Cut Grade for Diamonds - December

2004

Synthetic Diamonds - and Insuring Tips - January

Bogus Appraisals and Fraud - February

A Picture is Worth Thousands of Dollars - March

Don't be Duped by Fracture Filling - April

Gem Scams Point to Need for Change - May

What is a Good Appraisal - June

4Cs of Color Gemstones - July

Gem Laser Drilling: The Next Generation - August

Why Update an Appraisal? - September

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

Secrets of Sapphire - November

Will the Real Ruby Please Stand Up - December

2003

Mysterious Orient:
A Tale of Loss
- January

Bogus Diamond Certificates and Appraisals - February

Can Valuations be Trusted? - March

Spotting a Bogus Appraisal or Certificate - April

Counterfeit Diamond Certificates - May

Case of the Mysterious "Rare" Sapphires - June

Politically Correct Diamonds - July

Name Brand Diamonds - September

Princess Cut: Black Sheep of Diamonds - October

Reincarnate as a Diamond - November

Synthetic Diamonds - December

2002

Irradiated Mail/Irradiated Gems - January

Fake Diamonds (Moissonite) - February

GIA Diamond Report - March

AGS and Other Diamond Certificates - April

Colored Stone Certificates - May

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

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

Mysterious Disappearance: Case of the Missing Opals - August

The Discount Mirage - September

What Can You Learn from Salvage? - October

Gaining from Partial Loss - November

Year in Review - December

2001

Colored Diamonds - January

Good as Gold - February

Disclose Gem Treatments - March

FTC Jewelry Guidelines - April

Myths Part I: Each Piece is Unique - May

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

New Trend: Old Cut Stones - October

The Appraisal Process - November

Year in Review - December

2000

Deceptive Pricing - January

Gems - Natural or Manmade - February

Jeweler/Appraisal Credentials - March

Fracture Filling - April

Salvage Jewelery - May

Gem Treatments - June

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

Laser Drilling of Diamonds - August

Jeweler Ethics or the Lack Thereof - September

Gem Scam - October

The Truth about Clarity Grading - November

Year in Review - December

 

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Telemarketing Gems:
A Jewelry Scam

"Want to buy a high-quality ruby, turn around and sell it to a buyer I have waiting in the wings, and turn a quick profit?"

If this pitch already sounds suspicious, imagine hearing it from a telemarketer.

One of the most successful gem scams involves selling "investment quality" gems by phone. Reports of new versions of this transnational con game surface in the press whenever some luckless buyer finally gets wise.

In one recent episode, a woman in California received a phone call from a man who identified himself as representing the Zurich Exchange in Ontario, Canada. He offered to sell her a fully certified natural ruby for $1,650. She was interested because a few years earlier she had bought a sapphire from another investment gem seller and she was convinced it was appreciating in value. The caller said he had a Japanese investor interested in buying the pair of stones and she could make a handy profit. She sent in her money.

The ruby was delivered from Florida, not Canada. And it looked a bit fuzzy, but it was sealed "to retain its value," so she couldn't be sure. However, it arrived with an official-looking certificate from Gem Identification Services.

But before the Zurich Exchange could sell the two stones, as promised, the representative called again and offered to sell her a 1.26-carat pear-shaped ruby for $4,700. A European investor, he told her, wanted to buy all three stones for a much higher price.

When she asked why he didn't just sell the stones himself, he said his firm didn't allow that. When she asked for some type of proof that she would receive funds from the future large sale, he told her that "exchange regulations" did not permit him to put anything like that in writing. She eventually sent a $700 deposit and received the pear-shaped ruby.

By this time she was sufficiently suspicious to have the stones appraised. Experts estimated the ruby's value at $50-$400 per carat wholesale, rather than the $3,750 per carat the seller had promised.

Similar scams continue to be under investigation by the Federal Trade Commission as well as by Canadian officials.

Some of these scams involve multi-million dollar insurance fraud (see this pdf article about a $160 million scam).

FOR AGENTS & UNDERWRITING

What about that certificate? Didn't it verify the gem's quality? The document that buyer received was (purportedly) from Gem Identification Services in New York City. The president of GIS said, "Our function is to provide an identification of stones and a cosmetic description of their appearance. It is not a quality analysis." The document the buyer should have gotten was a proper appraisal, preferably on the ACORD >78/79 form, giving both a detailed description of the stone and a valuation. The sales receipt was obviously of no relevance in substantiating the gem's worth and would have been a poor basis for insuring this piece.

FOR CLAIMS

Whenever possible, double check the stated valuation.

If a stone is lost, and it was part of a group, have the other stones in the group appraised. These appraisals must be done at the insurer's cost, but they will give you an idea of the general quality of jewelry the policyholder purchased. Also, if the valuations on those stones turn out to be inflated, the valuation of the lost stone probably also was too high.

If a stone is presented as damaged, have it examined by a reliable jeweler. Inspection in a gem lab sometimes reveals that a stone was originally flawed and the flaw concealed by some temporary measure. The failure of such a temporary treatment is not considered damage.

CIA™ Corner

From David W. Hendry, Jr.
President, JCRS

Gem scams are constantly being "recycled." Joel Volker, a staff counsel at ACORD, related the history of one scam in his article in inACORD (#1, 1999). In the 1980s, a man reported finding a large unpolished stone in a shoe box. The stone was appraised at $12 million, and word of the rare find spread rapidly through the jewelry industry. A scandal broke out when other professional appraisers put the stone's worth at about $200. The original appraiser ultimately lost his membership in the respected American Gem society, and the matter was forgotten.

Fifteen years later the owners of the stone decided to move it to a private vault and had it reappraised — by the same appraiser who gave the original inaccurate appraisal. The appraiser took the original appraisal as valid and updated it for inflation, bringing its value to $16 million.

Why would the owners want to pay huge premiums on a worthless stone? They were setting the stage for an insurance scam. A likely scenario is that the stone would at some future time be discovered missing. With a valued contract, the insurer would have to pay the full insured value (based on the appraisal).

Fortunately, in this case the insurance underwriter was suspicious, remembered the original incident, and declined to insure based on that appraisal. But you can be sure that similar frauds have been successful elsewhere and they will come around again and again. Inflated valuations can be eliminated if the appraisal carries a detailed description of the gem and is prepared by a qualified, reputable appraiser. The ACORD >78/79 appraisal, prepared by a CIA™, provides both proper descriptions and accurate valuations. It also recognizes the insurer as a party in the appraisal (first-party legal position in case of a dispute).

 

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