Tim Belson, of Prestige Valuations, says the skyrocketing value of some luxury watches can cause a problem for insurance brokers but solutions are at hand to keep cover at the right amount.
Luxury watches are so much more than just timepieces – they can also be sound investments that offer significant returns
We’ve seen certain models of watches almost double in price over the last 12 months, which should be something to delight their owners.
However, the rapid rise in value in some luxury watches can cause a problem for insurance brokers and their clients, if the timepieces are not properly insured, because in the event of loss or theft, they would not be able to get a replacement. HNW brokers need to stay in touch with clients and make them aware of the need to revalue their watches.
Rolex, Patek Philippe, Audemars Piguet and Vacheron Constantin are the brands that provide a significant return on investment, but they are not the only ones. These are significant luxurious timepieces, made in limited quantities by master craftsmen, and are therefore highly sought after.
Investment
Some models, of course, are going up in price much more significantly than others, especially if they have been discontinued, but in general, luxury watches are a sound investment.
Classic watches, like the Patek Philippe Aquanaut and the Audemars Piguet Royal Oak, have seen their values skyrocket recently. Certain watches bought last year for £100,000 are now worth upwards of £125,000.
Styles of Patek Philippe Nautilus have gone up an incredible five times in worth after they were discontinued, because even when they were being manufactured, their market value far exceeded their list price.
Incredibly, some models have gone from £25,000 to £117,000 over the last 12 months, which is astonishing.
Rolex sports and steel watches have also been a sound investment, because they do so much more than just hold their value – especially if the model is no longer in production. Rolex is a household name, the benchmark of luxury watches, even if most people could only hope to possess one.
Demand
Demand for luxury watches far exceeds the supply, so people end up waiting for years to get their hands on a new timepiece. Others pay well above market rate for watches as an investment, and those are the people who tend to know exactly how much the individual watches are worth.
It is estimated that 80 per cent of ultra-high net worth individuals hold watches that attract premium values, including from those four top brands, so it’s no surprise that they are highly sought after timepieces.
Other brands and makes, like the Omega Seamaster, jump up in value whenever there is a new James Bond film, but otherwise tend to stay relatively static.
Watch prices are an ever-changing situation, and many people see them as a commodity, because they are moving up in price all the time.
The usual approach is to send customers a quarterly newsletter that highlights the biggest movers in the previous few months, in the hope they decide to get their watches revalued and insured.
But the problem with a newsletter is that it’s a catch-all – even if we follow it up with a direct email, telling people their specific watch has gone up in value, it still gets ignored.
Online
Brokers should emphasise that revaluing timepieces is not costly nor do customers need to send their property away to a jeweller. Valuations can now be done online. But many people are slow to realise the importance of getting their watches valued. Generally, the people who have a portfolio of luxury watches are also incredibly busy, and often do not have the time, or desire, to think about whether their watches are adequately insured.
Once brokers become aware that a client’s watch has gone up in price we would always suggest letting the customer know with a letter rather than an easily ignored email.
Watches by the big four manufacturers – Rolex, Patek Philippe, Audemars Piguet and Vacheron Constantin – are by no means the only ones that have increased in value significantly over the last few years, but they tend to be ones that attract the most attention.
They are the watches most sought after by ultra-high net worth individuals and collectors.
Collaborate
Brokers should work with valuers and be ready to collaborate to ensure their clients’ watches are insured for current values and inconvenience is minimal. For a large collection of watches, a home visit could be preferable and our valuations are instant.
We visited one client a couple of weeks ago whose portfolio of watches had increased in worth so much that after our visit, his insured sum went up by £400,000. And those premium increases he saw were nowhere near commensurate with the risk of not protecting his assets.
As always, proper valued items makes claims far smoother, and clients much happier.