With Africa’s millionaire population set to rise by 65% over the next decade, the continent is emerging as a key growth market for global luxury brands. Increasingly, high-net-worth individuals are investing in luxury goods, such as jewellery, watches and designer fashion. But as the demand for high-end items rises, so too does the risk of losing them to theft, loss or damage, says Elite Risk
Acceptance’s Tarina Vlok, who highlights the importance of insuring your most valuable assets.
The global luxury market is experiencing a slowdown, with its consumer base expected to be eroded by 50 million people due to weaker demand from China and the US. At the same time, however, the African market is experiencing a resurgence. Iconic brands like Gucci, Louis Vuitton, Chanel and Prada are looking to expand their presence in Africa, driven by a growing middle class, increased disposable income and a heightened appreciation for high-quality products.
For instance, watch maker Rolex is set to open its first standalone store in SA’s Diamond Walk at Sandton City later this year. A key market for high-end goods is South Africa, where the luxury retail trading density has risen by 8%, outperforming the global average.
Pre-owned luxury is the new must-have
“Luxury brands demonstrate greater resilience during economic downturns,” says Tarina Vlok, MD at Elite Risk Acceptances, a wholly-owned subsidiary of Old Mutual Insure which services high-net worth individuals.
South Africans know how to shop for a bargain. “Even though many can’t afford a new Burberry coat for R48,700, they can find a second-hand one in excellent condition for less than a tenth of the price,” she says. “The same goes for Cartier Love bracelets. And, women are no longer waiting for men to spoil them. They are buying luxury goods like jewellery for themselves these days.”
Insuring your costliest assets
Given the surge in demand for luxury goods, it makes sense to invest in the right insurance policy to protect your valuables from the risk of theft, loss or damage. “Standard insurance policies may not adequately cover luxury items,” explains Vlok. “Wealthy people must ensure that they have appropriate short-term insurance cover to match their risk appetite.”
Vlok says that Elite’s target market may have jewellery items with a value in excess of R5 million, and an entire jewellery collection valued well into the tens of millions. “This is the market that we cater to,” she comments. “If you’re looking for the best insurance, we recommend speaking to your broker who will organise the optimal coverage tailored to your specific needs.”
Tips and tricks for getting the most out of your insurance
The first thing to remember when buying luxury goods is to keep your purchasing invoice and make sure you authenticate them, stresses Vlok. Because insurance is a contract, we cannot insure illegal items, and fake luxury goods are illegal and must be destroyed.
In cases like these, insurers are unlikely to pay out. “To prevent buying fake goods, we recommend only shopping through well-known dealers,” Vlok emphasises.
Another tip is to store your luxury goods securely. “Lock your expensive jewellery items in a wall-mounted or walk-in safe which no staff member has access to,” she advises. “Don’t leave your jewellery lying around if you’re taking a nap.”
It’s also important to have your luxury assets regularly valuated – at least every three years to ensure your coverage reflects current market values and inflation. “Some jewellers offer home visits, so you don’t have to worry about keeping your jewellery safe while in transit,” she says.
Lastly, remember that selfies boasting your new purchase may not be a good idea. “Theft is still a reality, so don’t geo-tag yourself on social media,” she cautions.
With these guidelines in mind, Vlok believes you’ll be able to enjoy your designer wear without any fears. “Insure your luxury items properly – they’re an excellent long-term investment and it pays to treat them well.”
