Broker Update: It’s Time to Disrupt Swiss Watch Insurance

One of our 2020 Resolutions here at Insurance Edge is to spot areas where brokers, MGAs and insurers can apply disruptive new tech in a niche market that is expanding rapidly. In other words; an investment that offers a rapid return. Sounds interesting right?

Well one such boom area of the UK economy is luxury Swiss watches, where the traditional business model of offering annual cover based on a couple owning two matching Rolex Datejusts, with the purchase price/NRV being the main factor, and the watches being kept in a fireproof safe most of the time, just does not cut it anymore. Forgive the cliche, but times have changed and insurers need to wake up from their cosy slumbers.

There are several ways that new players can get into this highly specialised – and potentially lucrative – market, but first let’s have a look at the massive increase in demand for Swiss watches, who is collecting them, how they are being used, the phenomenal rise in value of particular collectable vintage watches, and the links between social media and organised crime.

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The decision ten years ago by major banks to end paying worthwhile interest rates on savings sent money eleswhere. Some went into property, and that has been peachy for many middle class people, but recent changes in the law have given tenants more rights, toughened regulation and landlords less profit margin.

So a Swiss watch – or sometimes a Japanese, British or German watch – can offer investment potential in the medium term,. There are long waiting lists – sometimes years long– for particular editions of Rolex Daytonas, `Hulk’ Submariners, Audemars Royal Oaks etc and this has boosted the value of pre-owned examples, depending on the bracelet strap, dial colour, bezel and other details.

One Manchester watch dealer David Robinson employs two people, full-time, to cope with enquiries for particularly scare models, such is the demand. We found a pawnbroker asking 35K for an 18ct gold Rolex Daytona with an RRP of 27K. So a deep understanding of the luxury watch market is the first step for any broker or insurtech company looking to enter this space. Otherwise you might insure a watch for the RRP, not the true market value.

rolex cosmograph

How quickly is the watch market growing? Who is buying?

Glad you asked. The short answer is that the mid-market is collapsing and the luxury, high-end sector is booming like electric cars. Watches of Switzerland posted profits of £770m in 2019, up 22%. Website Watchfinder.co.uk saw sales rise to £109m just before selling out to Richemont Group (owners of Cartier, Mont Blanc, Panerai, IWC aand many other luxury brands) and trade journal WatchPro estimates the luxury end of the market(£1000 plus price tag) is worth £1 billion annually, with growth at 14% anually.

People-  even relatively poor people – crave the kudos that a luxury brand name bestows upon them. Brokers and MGAs need to understand that the market is rapidly changing and there is NO SUCH THING as a typical Swiss watch buyer anymore. It could be a self-made business man wanting a few Rolexes to show off his wealth, a lady working in the public sector who wants to treat herself to a Cartier, a retired landlord looking to invest in a watch collection, or a student who wants a flash watch because that is just affordable – whereas a house will never be.

Jaeger-LeCoultre-Master-Ultra-Thin insurance value

Your insurance needs to be fit for purpose

Let me start by asking you a question; do you know what a genuine Jaeger Le Coultre Master Thin winding crown looks like? No, of course not – you have a life. But your avid watch collector DOES know these things, and if that crown breaks then it must be replaced by an exact, perfect, and genuine, spare part. Not a replica, not another JLC crown, but a crown from the same reference, the same model spec, same year. Otherwise that watch just lost about 5% of its value, possibly.

In some cases, even with relatively young watches, spare parts will be impossible to source and there’s a simple reason for this; Rolex and others would rather sell you a new watch, than restore or repair a 20 year old example. So they don’t supply spares.

In general, you will need to use an authorised repair centre if a watch is damaged. Things like bezels and links can be easily scratched, and it takes real skill – and the correct tools – to renovate these delicate parts. So giving customers confidence that repairs will be carried out by trained experts is essential. In the case of older watches, you need to offer agreed valuations, so that someone can hunt down another example of their Submariner, or Zenith El Primero, if they so choose.

Vintage watch collectors will rarely want a modern homage to a genuine Heuer Autavia for example – they want the real deal. Not a factory copy. Often a vintage 1960s watch is worth far more than a modern version made by TAG, Rolex, Omega, Breitling etc so don’t think that you’ll make any friends by trying to fob someone off with a modern version if their pride and joy has been stolen.

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Sales have shifted online, so have thieves

Although jewellers shops are still being ram-raided and staff attacked with machetes on a regular basis, the way thieves find their loot, and dispose of their watches has changed. Many burglars and muggers are well aware which models are in high demand and they have a stream of customers willing to buy, even without box or paperwork. So they will follow you, with stalker-like zeal.

Thieves will use Whatsapp, FB, Twitter, Instagram and other channels to spot idiots taking photos of their watches, and post those pics in real time, as they schmooze at some function. Journalists, or people within the watch industry, attending watch fairs have been targeted at their hotels. Your clients need to be told in the T&Cs of the policy that NO SOCIAL MEDIA photos are to be posted of watches worth in excess of say £2000.

The best anti-theft policy that anyone owning a luxury watch can adhere to is simply this; stay offline completely, at least as regards your watch collection goes. As a broker or online uinsurer one piece of advice you can offer is to recommend that your client travels wearing a low value Oris, Seiko, Longines, TAG, Rado etc – something not quite so nickable – and quartz powered – is often the perfect everyday Swiss watch.

Other things to watch out for from an insurer point of view is house security. Does the insured use a cleaner, or employ domestic staff on a casual basis? These are often the people who nick watches and jewellery, so it is a risk that needs factoring in carefully. Next up; business travel. Is the insured wearing different watches on holiday, or attending conferences etc? Your policy can include a feature like Buzzvault’s contents insurance, where you take a series of photos and then that watch is insured whilst on the move – so long as it remains on the wrist of course.

Thieves are resourceful. There is a case where a lady was accused by a gentleman of stealing five Rolex watches after a brief liaison at a hotel room. Four Rolexes were found by Florida Police inside her vagina. So people travelling on business need to be careful when it comes to erm..making new friends.

longines heritage insurance value over 1000

Collectors will change watches frequently, so your online product needs an easy-peasy upload system where photos, tech specs that pre-fill and more, all makes it possible for collections to vary, without incurring large mid-term admin fees. If a collector is using something like the Watch Register to check before buying, then they should get a better deal than someone simply buying from Facebook Marketplace or eBay and hoping their new Zenith Defy isn’t stolen.

In short, anyone disrupting this market needs to offer watch insurance that changes the sum assured as particular models rise in value, covers watches in transit for servicing because automatics require this every 5/7 years or so. You also must have a photo upload platform, where reference/model data can be pre-filled to save time for customer. Vintage watch insurance needs a blend of tech and balls-deep specialised knowledge by your staff. We are talking months of training here, and an enthusiasm for watches that borders on obsession.

There is money to be made as the market continues to rocket, and maybe the solution is to partner up with a brand to learn for a year or two, before taking on the major HNW and specialised players in this market. Most of all, keep learning and keep listening to the watch enthusiasts online, for ultimately they are driving the values of these timepieces upwards.

About alastair walker 8976 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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