June 2018

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

2024

Gems aren't only in jewelry - January

A new switcheroo - February

Diamond deflation - March

2023

Exploring the 4 Cs: Carat Weight & Cut are a team - January

Beautiful gems — but not always in jewelry - February

Rapaport's New Year Message - March

New technology, new standards for diamond cut - April

Wedding season has a new star - May

Lab-Grown Colored Gems - June

Price, value, valuation ... and limit of liability - July

Lab-Grown Diamonds – now and into the future - August

Fake diamond certificates – recurring scams and a strange new one - September

Mined or lab-made? - October

Fraud catcher: the sales receipt - November

2022

What's up with diamonds? Prices! - January

Ferreting out the Fakes - February

Vodka, caviar . . . and diamonds? - March

Conflict of Interest - April

Under the "covers" - May

Agents: Do you know who you're doing business with? - June

Brand-name fakes: a tale of jewelry, duplicity, and international intrigue - July

What is insurable jewelry? - August

Vintage Rolexes - September

Lab-Made Diamonds in the Fast Lane - October

Exploring the 4 Cs: Color – more complex than you may think - November

Exploring the 4 Cs: Clarity – for all transparent gems - December

 

2021

High-end jewelry & its docs - January

Where is gold going? - February

Hot off the press: Imposter diamonds & forged inscriptions - March

Jewelry insurers’ ethics - April

Can you spot a forgery? - May

Green Diamonds - June

Is the appraisal good enough? And is it enough? - July

Men’s Jewelry—Passing fad or wave of the future? - August

Jewelry appraisals — watches vs. jewels - September

Replacements & CAD/CAM - October

Lab-Grown Diamonds are coming your way - November

How important is the picture? Very! - December

2020

2020 Fraud Alert! Fake Lab Reports - January

Is it worth its weight in gold? - February

Grading lab-made diamonds - March

Safety deposit boxes - April

Evaluating a jewelry appraisal - May

Verifying the Lab Report - June

When you need a jewelry appraisal, what do you do? - July

Calling a diamond a diamond - August

Diamond clarity meets Artificial Intelligence - September

Mined or Lab-made: Who knows? - October

Covid 19 & jewelry insurance - November

Gem Enhancement’s slippery slope - December

2019

Gem Certificates again at issue - January

Yogo sapphires – What's in a name? - February

Lab-made diamonds: pricing, grading, valuation - March

What is an "eco-friendly" diamond? - April

GIA report: What's left out - May

A tale from the Caribbean - June

Lab-Grown diamonds are taking off - July

Brand impersonators & counterfeit jewelry - August

Lab reports for colored gems - September

FTC Guidelines for jewelry - October

Selling Salvage Jewelry - November

What's in a name—a brand name, that is? - December

2018

What's a Certified Appraiser? - January

Best Appraiser Credentials - February

Are the diamonds you’re insuring real? - March

Handwritten Appraisals - April

Internet Tips for Jewelry Insurers - May

De Beers will sell lab-grown diamonds - June

Do genuine gemstones break? - July

Luxury Watches - August

Who owns the ring? - September

Insuring Bling - October

The Price of a Replacement - November

Love Is In The Air - December

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

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

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

Growing 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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De Beers will sell lab-grown diamonds


Graphic from Lightbox website

De Beers recently announced that it will begin selling jewelry with lab-grown diamonds. Starting in September, De Beers will retail directly to the public through its Lightbox website.

The surprise move could be a game-changer for the jewelry industry, for consumers, and for jewelry insurers.

Pricing is the disrupter

For mined diamond, the per-carat price increases with gem size. For example, a ¼-carat stone might be $500, while a 1-carat stone of similar quality could be $3900. This is because, other things being equal, larger stones are more rare than smaller sizes. Color, clarity and cut also affect pricing.

Most manufacturers of lab-made diamonds have followed a similar pricing pattern, though keeping their lab-made stones about 30% below mined diamonds.

De Beers' Lightbox enters the field with a starkly simple pricing model. It will sell its lab-made diamonds for $800/carat, period. A half-carat diamond is $400, quarter-carat is $200, etc. The buyer can choose pink, pale blue or white (colorless) diamond, all for the same price.

So much for carat weight, but what about the other 3 Cs—color, clarity and cut (faceting)? De Beers will not grade the diamonds in the traditional way because, as CEO Bruce Cleaver put it, "We don't think they deserve to be graded. They're all the same."

De Beers implies that these qualities are not important. Yet the 4 Cs affect valuation for lab-made as well as mined diamond, and reliable grading labs like the GIA produce reports for synthetic as well as for mined diamonds.

The lack of gem grading seems to indicate slick marketing. While a buyer may compare the price of Lightbox diamonds to other diamonds of the same carat weight, she will not have information about color, clarity and cut, all of which affect valuation. Some consider non-disclosure of such information deceptive marketing, and deliberate non-disclosure is often a warning sign of poor quality.

Pricing of Lightbox's jewelry settings is also simplified. For every piece in every design Lightbox offers—rings, earrings, pendants—the price will be $100 in silver or $200 in 10-karat gold.
 
Insurers should note that 10k gold is the lowest karatage jewelry can have and still be considered gold. Pieces of this karatage are generally considered "bridge" jewelry. Fine jewelry is composed of premium, expensive components, produced with attention to detail; costume jewelry is usually mass produced using inexpensive components; bridge jewelry falls in between.

Each Lightbox diamond will carry the brand's logo (visible only under high magnification), so gemologists can identify it as lab-made. But, as we have noted in earlier discussions, a logo etched into the girdle of a stone can be removed.



Photos from Lightbox website

An about-face for De Beers?

De Beers, creator of the slogan "A diamond is forever," is a major force in the world of mined diamonds. It has operated mines from the Arctic to South Africa and has historically controlled the supply of mined diamonds to assure their "rarity" in the marketplace and thus justify their high price.

For some time the company has said that it would never sell lab-made diamonds.

De Beers hasn't changed its primary focus on mined diamonds. It has just added a new product line and massaged its marketing to appeal to Millennials, who are not inclined to spend large sums on jewelry. The lab-grown diamonds from Lightbox are "for lighter moods and lighter moments, like birthdays and beach days."

While most diamond producers are focusing on bridal jewelry, Lightbox addresses "the self-purchasing professional and younger woman," says Sally Morrison, head of marketing for Lightbox. This jewelry is meant to appeal to a woman "who doesn't want the weight and seriousness of a real diamond for everyday life."

Just what is "real" diamond?

Where do REAL diamonds come from?

Mined from the earth after billions of years?

placing a chip
Grown in a lab in about 3 weeks?


Pressed by a strong hand for a few seconds?

During the past couple of years De Beers has taken part in the "Real Is Rare" advertising campaign, which promoted mined diamonds as the only "real" diamonds.

Element Six, the industrial arm of De Beers, has been producing industrial grade diamond for 50 years. Recently it's been growing gem-grade stones to help De Beers develop the technology to distinguish mined diamond from lab-made. De Beers markets this technology, but its pricing—between $10,000 and $50,000, depending on the device—is far beyond what the typical appraiser can afford.

In any case, the results from the machines are skewed to De Beers' definition of diamond. Its Automated Melee Screener, priced at $45,000, separates out mined diamond and tosses lab-grown diamonds into the "non-diamond" bin, along with imitations like CZ.

De Beers continues to sell mined diamonds in luxury settings under its Forevermark brand, marketing them for important occasions like engagements and anniversaries.  "Synthetics are fun and fashionable," said CEO Bruce Cleaver, "but they are not real diamonds in my book. They aren't rare or given at life's great moments. Nor should they be."
 
Other diamond growers would strongly disagree. Mined and lab-grown diamonds have the same chemical, physical and optical properties. Lab-grown diamonds are sold in quality settings and provide a more affordable alternative to mined diamond. And they come with grading reports from, for example, GIA.

Lightbox pricing severely undercuts other diamond growers. De Beers can, because of its size, absorb losses to an extent that other producers of synthetics cannot. It remains to be seen how this entry into the market will affect pricing and sales of both mined diamond and other synthetics.

It's possible that Lightbox synthetics may increase the value perception of the Forevermark brand, promoting the idea that a diamond with a high price must be better, must be more "real."

Since the Lightbox synthetics are not yet for sale, this is just a heads-up for insurers. We will report more as details become available.

FOR AGENTS AND UNDERWRITERS

Mined and lab-grown diamonds have the same chemical, physical and optical properties. And if Superman got into the game, his could be just as good. Value is determined by quality and, ultimately, by the market.

Although lab-grown diamonds make up only a small percentage of diamond sales, that percentage is growing. Because of the price difference between mined and lab-made stones, it's good practice to always check the appraisal.

A diamond appraisal should explicitly state that the stone is either mined or lab-made. Lab-grown diamond is real diamond, but its valuation is lower than for mined diamond.

Because synthetics can be difficult to detect, it's best to ask for a sales receipt. The selling price is a good indication of value, and the retailer's name may provide useful information.

Some lab-grown diamonds are inscribed with the name of the manufacturer, though some are not. And inscriptions on the gem's girdle can be removed. Deliberate non-disclosure is always possible.

Check the appraisal for all terms signifying lab-made, including synthetic, grown, man-made, lab-made, lab-grown, cultured, and created.

Gem-grading labs have received parcels with lab-grown diamonds mixed in with mined gems. How many lab-made stones have not been "caught" and are out in the marketplace being sold, and priced, as mined diamonds? The potential for overpayment on claims is enormous.

FOR ADJUSTERS

Reputable makers of lab-made diamonds want to associate their names with their products. Recognizing these names, or working with a jewelry expert who does, could save you tens of thousands of dollars on a claim.

There are, of course, disreputable gem-growers, so you cannot assume a gem is mined just because the appraisal doesn't mention synthetic, lab-grown, etc. This is especially important for diamonds of high value.

Disclosure information can get "lost." A customer may buy jewelry with synthetic diamonds, not understanding the meaning of a term like cultured, for example, or not appreciating the large difference in value between mined and grown diamond. When he becomes aware that he made a bad purchase, he may "sell" it to the insurance company through a fraudulent claim.

Jewelry with multiple gems may have mined and lab-grown stones mixed together

If the appraisal does not explicitly state the gem is mined, use every means possible to determine whether it is mined or lab-grown. Be especially diligent with colored diamonds.

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