An article in the Singapore Straits Times from last weekend caught my eye. It was entitled ‘Time to look at collectibles amid inflation’ and outlined the relative benefits of investing in luxury items such as Rolex or Cartier watches, Bordeaux and Burgundy fine wines and Chanel handbags, except for the wine, things we maintain data bases for.
Amidst the uncertainty of global (financial) markets, the article talked about the growing number of investors, including the Millennial generation, putting their money into collectibles. These are widely regarded as an integral part of wealth, and a report on collectibles from Credit Suisse has identified that items of intrinsic or social value such as collectibles, which can ultimately be monetized, often play an important role as a store of value.
The stats would seem to back this up. Credit Suisse’s Global Wealth Report 2020 demonstrated the relative stability of non-financial assets compered to financial assets in times of great volatility. It sees their role as adding an extra dimension to investors’ portfolios by helping to diversify asset allocation and provide an element of safety.
Not just that of course, but carrying a luxury handbag, wearing a classic timepiece or hanging great art on the wall, delivers a huge measure of personal pleasure, not just to the owner, but to a bevy of admirers too.
Looking more closely at the Credit Suisse collectibles report, it is clear that a shift in how collectibles are purchased has been brought about by the inevitable move online. It details how a watch can now be ready for a live auction in less than five days, whereas previously it could take as long as five months, thereby introducing an improved level of liquidity for such assets. Figures quoted in the report estimate that the second-hand watch market is worth USD 5 billion in revenue, and this is increasing by 5% per year.
The flip side to investing in collectibles is that they can present a security risk. The more visible that handbag, or that beautiful necklace, the more likely an owner is to be targeted for theft and damage to an item will obviously impact resale values. In the same way that banks provide custody for financial assets, investors need insurance that allows them to protect the value of their items, while at the same time enjoying them fully.
We can’t advise our customers on their fine wine choices, or which watch to purchase, but we can provide smart technology allowing the efficient protection of their collectible through insurance.
What is more, if our customers choose to travel with their luxury items, or move house the insurance policy remains intact. It moves with them. They can manage their policy from the convenience of a smartphone app, see a list of everything they have insured, receive a valuation free of charge, and choose exactly what they want to insure, when they want to insure it.
As collectibles increasingly form an important part of the lifestyle of today’s consumer, insurance must be agile and robust enough to meet their needs. After all, if they are prepared to invest heavily in an item that is appreciated for its craftsmanship, protecting its value will be very high on the agenda.
(Posted by our CEO Stephan Kaiser)