Skip to main content
Marsh logo

Article

How retailers of luxury brands and collectibles can reduce risk

Jewellery, watches, coins, diamonds, and other luxury goods are in demand, while US sneaker prices have reached record highs this decade.
Person's name and title

By Charlie Horrell , 

Managing Director - Fine Art, Luxury Brands & Specie, FINPRO - Specie

02/07/2024 · 4 minute read

Jewellery, watches, coins, diamonds, and other luxury goods are in demand, while US sneaker prices have reached record highs this decade. The sale of a Mickey Mantle baseball card for US$12.6 million recently demonstrated just how much a collectible can fetch.

Fears of recession and inflation seem to have done little to dampen the sale of many luxury items, at a time the collectibles market is expected to grow 6.2% annually to surpass US$1 trillion by 2033.

Items of high value, though, are always at risk of being stolen. In recent years, we have seen an increase in the theft of luxury items, particularly of watches stolen from individuals in public places. Valuables can also be destroyed by fire or even damaged during a natural catastrophe event.

However, there are a number of ways traditional boutiques, auction houses, online resellers, museums, and rental sites can protect their luxury brands or collectibles.

Protecting against smash-and-grab thefts

Valuables can be stolen in seconds from glass cases in smash-and-grab thefts. At the Tefaf art fair in 2022, a man smashed a glass-lined booth with a sledgehammer, soon after the event opened, stealing several items of jewellery. Nevertheless, valuables are frequently left unattended in glass display units in hotels or in store windows overnight. Often at art and jewellery fairs, items are spread out, making them easier to grab.

To mitigate their exposure to theft, retailers can employ security guards, install video surveillance systems, and use showcases made from impact-resistant glazing material. They can also lock up items in safes at night or at any time the shop is unguarded.

Equally important is ensuring staff follow procedures that will make it harder for criminals to steal items. Thieves often work in groups, creating diversions to distract sales staff. Sometimes they fake illness, ask excessive questions, and even use children in ploys to distract staff while a theft takes place. To deter would-be criminals, staff should only show one item at a time to a customer, stay engaged with them while they look at it, and lock display cabinets every time they remove a piece. A surveyor can advise retailers on further protocols they can introduce to reduce the likelihood of theft.

Mitigating fire and flood risk

Natural catastrophes, such as earthquake, wildfire, flood, hurricane, and windstorm, threaten collections around the world. Luxury brand and collectible retailers located in natural catastrophe-prone areas should consider arranging access to an alternative storage facility that can be used in the case of an extreme weather or earthquake warning as a possible practical solution to protecting their collections.

If moving a collection is not feasible, retailers should make sure they have the proper storage arrangements in place to protect goods during a catastrophe event. In earthquake-prone zones, for instance, wine collections can be locked in place, using padding, in lockable cabinets. Storage of goods in professional warehouses might be an option for some retailers.

Fire resulting from arson or carelessness is also a threat to any collection. Owners of valuables are recommended to make sure they have the correct fire protections in place, including sprinklers and oxygen extractors.

Why a specie policy may offer the best cover          

Luxury brands and collectibles require insurance when they are stored, displayed, or transported. A specie policy may be the most suitable cover for these items due to the broad nature of the coverage and the access to risk management specialists these contracts provide.

While a property policy usually covers items at the value declared on an insurance schedule, a specie policy can insure them for the market value at the time of loss or an agreed price — whatever is the greater amount. Pricing for specie cover is also competitive, given the US$3 billion of market capacity, at present.

For more information on a specie policy, please contact your Marsh adviser. 

Meet our author

Charlie Horrell

Charlie Horrell

Managing Director - Fine Art, Luxury Brands & Specie, FINPRO - Specie