JUNE 2003

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

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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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The Chanthaburi Connection:
The Case of the Mysterious
Rare Sapphires

"The degree to which gems are treated has spun out of control…. (Some new procedures) don't just enhance the stone, they design it beyond what nature intended." — a U.S. gem trade professional

About 250 kilometers southeast of Bangkok, not far from the Cambodian border, lies the town of Chanthaburi. Chanthaburi is a center of world trade in colored gems, primarily rubies and sapphires. (Both ruby and sapphire are of the gem species corundum. Red corundum is classified as ruby, all other colors are called sapphire.) It is estimated that 50% to 80% of the world's rubies and sapphires pass through Chanthaburi to be sorted and treated. There they are sold to wholesalers who polish the gems and sell them to retailers and jewelry manufacturers around the world. Thus, whatever happens in Chanthaburi affects the world gem market.

In late 2001, the gem markets of Chanthaburi were suddenly flooded with a very rare orange-pink sapphire called a Padparadsha. Wholesalers immediately began buying the Padparadshas at prices as much as ten times the going rate for regular pink or yellow sapphire.

With the sapphire market thrown into turmoil by the unexpected influx of Padparadshas, a suspicious gem industry wondered, "Were the Padparadshas natural, or were these low-quality sapphires that had been treated to look like the rare and expensive ones?"

In the gem industry it is acceptable industry practice to heat imperfect gems to enhance their color and appearance. These treatments began in Chanthaburi more than 30 years ago, when technology allowed stoves to burn at temperatures as high as 3,200 degrees Fahrenheit. Today, at least 90% of the rubies and sapphires sold worldwide are heat-treated.

Contemporary treatments involve not only heating but also using additives. For example, processors add titanium to colorless sapphires to create rich blue hues. They also conceal fractures and cavities by filling them with baser materials. Such treatments are controversial because they can be used to mislead the customer about the quality of the gem. Ethical dealers will disclose such treatments each time the gem material is sold (trader to wholesaler, wholesaler to jewelry manufacturer, manufacturer to retailer, retailer to consumer).

When the "Padparadshas" of Chanthaburi hit the wholesale market, no such disclosure was made. Indeed, many international laboratories subsequently appraised them as genuine. However, the Gemological Testing Center of American Gem Trade Association (AGTA) was suspicious because all the stones they examined had uniform color penetration. Most natural stones have uneven color zones. Gemologists there also noted that the color did not penetrate to the core, suggesting that color had been applied. It turned out low-quality stones had been diffusion treated with beryllium to mimic the rare Padparadshas.

Wholesalers who bought the fake Padparadshas paid about $4,000 a carat, 10 times what the stones were worth. Retailers could wind up paying $15,000 to $20,000 per carat, because the markup for color stones is much higher than for diamonds. The high prices are passed on to the consumer.

New technologies and the expanding gem market encourage more and more processing of gems to imitate rarity and high quality. Gem treatments have, as one industry expert put it, "spun out of control," and so has the variety of scams. A consumer buying high-priced, purportedly rare, gems should always have the quality verified by an experienced gemologist.

FOR AGENTS & UNDERWRITING

Natural Padparadshas are very rare in nature and are priced accordingly. Such high-priced jewelry should have two appraisals describing the jewelry and verifying its quality. At least one should be from a graduate gemologist who is also a Certified Insurance Appraiser (CIA)™.

For colored stones, it is essential that the appraisal be written by a gemologist experienced with colored stones. Most jewelers deal primarily with diamonds, and even a trained gemologist may have little experience with colored stones. Note that several labs passed on the bogus Padparadshas before one lab discovered the fraud.

All treatments not part of the usual processing of the gem should be disclosed on the appraisal. A trained gemologist will be able to identify treatments that should be disclosed.

If a gem is not treated, that should be specifically stated on the appraisal. A treated stone has only a fraction of the value of an untreated gem of similar appearance.

A reminder: As discussed in the May 2002 issue, the value of a colored stone Certificate varies according to the lab that issues it. If you are insuring a colored stone accompanied by a certificate, it would be worthwhile to review the May 2002 issue. In any case, a certificate is not a substitute for an appraisal. Certificates describe only the gem, not the jewelry, and they do not give valuation.

FOR CLAIMS

While there are fewer claims on colored stones than on diamonds, colored stones usually have much higher markups and generally have inflated valuations. A typical one-carat sapphire, for example, has a replacement cost of about $174.

Natural Padparadshas are very rare in nature. In settling a claim on such a high-value sapphire, be sure the appraisal states that the gem is natural and untreated. Do not assume that if the appraisal doesn't mention treatments, the gem must be untreated; most likely, if treatment (or lack of it) is not mentioned, other information is incomplete as well.

For claims on damaged stones, always have high-priced jewelry inspected by an appraiser to determine whether the gems have been treated. Treatments such as fracture filling may break down, causing changes in the stone that are not damage for which the insurer is liable.

 

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