Art & Private Client News

A selection of articles written especially for our Art & Private Client brokers and your clients, highlighting current trends and considerations within the high net worth market, and penned by our expert in-house and external partners.

Contents

3 The benefits and risks of Modern Methods of Construction (MMC)

5 Now is the time to develop a pro-active state of mind about your collection

8 For what it’s worth

10 This is how criminal gangs are targeting people

David Parkinson, Ecclesiastical’s Risk Management Technical Services Manager takes a look behind the walls of modern buildings often favoured by high net worth clients to uncover some of the benefits and risks of these burgeoning construction methods.

‘Modern Methods of Construction’ (MMC) is becoming an increasingly wide-ranging term. In essence, it refers to buildings that are constructed using components that are factory built. In high-quality contemporary builds, walls, roofs and even entire rooms are prefabricated to a very high standard and then assembled on site. As technology and techniques develop, the term has expanded to cover high-end modern timber frame construction, green roofs and walls, external cladding and panel systems, thermal insulation and energy efficiency.

By comparison traditional housing stock, which is built with brick and stone walls, slate and tile

roofs take far longer to build and many onsite trades will be involved in the construction with the challenges this inevitably brings. Skilled tradespeople can be hard to source in the current climate, with demand outstripping resource.

Contemporary MMC homes are designed to deliver low energy performance using sustainable materials and can be built to meet individual customer requirements.Timber framed and glazed eco houses are

growing in popularity, often showcased on programmes like Grand Designs. Their environmental credentials have great appeal for people looking to live more sustainably and the scope for breathtaking design make them an attractive proposition for high net worth clients with the budget to create bespoke, high-end homes.

So given the housing shortage and potential gains of using MMC why aren’t all houses built this way?In the drive to provide thermally efficient and environmentally-friendly buildings lightweight materials, which may often be combustible, are used. These materials may provide inferior fire performance compared to traditional brick and stone built buildings and may be less resilient to damage in general terms. For example, saturated wall and floor insulation materials may take far longer to dry out and repair following a flood or leak.

MMC buildings often incorporate a structural load-bearing framework to support the various other building components. Assembly around the frame can lead to the introduction of voids. Left unprotected, these can support the quick passage of fire through the structure, making it a very difficult situation for the fire and rescue service to tackle. The introduction and maintenance of suitable fire stopping techniques at the construction and assembly stage is critical to the future fire performance of the building.

Modern Methods of Construction’ (MMC) is becoming an increasingly wide-ranging term.

The benefits and risks of Modern Methods of Construction (MMC) - David Parkinson, Technical Services Manager, Ecclesiastical

By comparison, construction techniques and the materials used in traditionally built housing are well known and understood.

Making the decision to buy an MMC home.If you have clients looking to buy a pre-built property, they need to do so in the knowledge of both the benefits and potential risks. Careful selection and specification of innovative buildings, built to achieve a recognised standard, such as those developed by BRE (Building Research Establishment) including BPS 7014 currently being developed, and the Loss Prevention Certification Board (LPCB), including LPS 1501, can help manage some of the risks associated with such buildings. Partnering with architects, builders and insurers that understand both the benefits and risks associated with such builds is important. These houses may well become our listed properties of the future, so ensuring they are constructed using sustainable innovation is key.

Ecclesiastical’s in-house team of specialist surveyors and consultants understand the benefits and challenges associated with innovative housing design and construction. We can support your high net worth clients, providing tailored risk management and building valuation advice to help them protect their property. Our in-house specialists give advice on a variety of topics supported by expert external partners to ensure the advice you receive is always of the highest standard.

You can ask us about:

n Health and safety

n Construction safety

n Food safety

n Occupational health

n Environmental management

n Water safety

n Asbestos

n Property protection

n Security

n Fire safety

n Business continuity planning.

Risk advice lineFor specific risk advice about topics including, health and safety, fire and security, Ecclesiastical customers can contact our risk experts on: 0345 600 7531

Lines are open 9am - 5pm Monday to Friday (excluding bank holidaysrisk.advice@ecclesiastical.com

There are big changes impacting fine art,

antiques and collectibles markets right now,

and it’s time to ensure you are up-to-date with

the latest developments, and how they may

impact your collection. Values change and

it’s important to make sure that valuations are

up-to-date and you have the right insurance,

protection and security in place as we move

through the next few years.

A new political and legislative landscape has begun

We are reaching a watershed in the sometimes secretive, highly specialised art and collectibles markets in Britain, Europe and throughout the world. Post-Brexit tax implications will soon be felt in auction houses throughout the UK and Europe, and we can expect some countries to see an increase in sales prices as a result, while other markets return softer sales in the next couple of years.

Legislation is also set to impact the art market. The Fifth Anti-Money Laundering Directive (5AMLD) became UK law in January 2020. Passed as legislation regardless of Brexit, the Directive requires art and antique dealers to comply for the first time with measures designed to combat financial crime and terrorist funding.

In May a last ditched attempt by art dealers to overturn Britain’s Ivory Act failed at the Court of Appeal. Introduced in December 2018, the Act is among the strictest in the world and prohibits the trade of a large number of art and antique objects containing ivory that were previously being sold legitimately.

New technology is here... are you up- to-date?

Advances in technology are making the market more accessible and transparent and are impacting on how collectors educate themselves,

purchase, protect, organise and sell collectible objects.

One of the positive technological impacts that all collectors should consider learning more about is the protection of their artworks and collections in online inventory systems. Blockchain and online inventory systems help to organise, record and provide authenticity, condition reports and provenance for collections. Theft, extreme weather events or natural disasters can devastate a collection or your valuables – vital information reports and provenance records can easily be

stored online and are quickly accessible in case disaster strikes or you need to make an insurance claim.

Millennials are the fastest growing group of art collectors and they’re impacting the market in significant ways: they are three times more likely to sell an artwork they’ve collected than baby boomers, and are looking for a more liquid art market. They prioritise digital platforms to buy and sell and look for specific items on a global basis.

Now is the time to develop a pro-active state of mind about your collection

Collectors should consider learning about online inventory systems.

Millennials prioritise digital platforms to buy and sell.

New markets, new generations: change is the only thing that stays the same

It’s not an exaggeration to suggest many collectors begin their collections because they discover something which stirs them deeply, fuels a belief in perfection, is an object they wish to possess, admire and care for, or perhaps, even to participate in. This state of mind is almost opposite to the Greek philosopher Heraclitus’ claim that ‘change is the only constant in life’; and yet, it’s a state of mind that will not protect and grow the value of a collection alone. You need an ‘investor’s brain’ combined with a ‘collector’s eye’ to build and protect a financially successful collection.

The world and the markets will always change. Successful collectors understand the need to educate themselves over and over again. They build relationships over many years with professional and impartial experts and auction houses of integrity and of relevance to their collections. They seek out the best advice, stay

abreast of market trends and are aware of wider changes that may impact on their collections.

The most successful collectors develop knowledge and understanding year on year and update the records, valuations, security and protection of the value of their collections on a regular basis. Whether you are starting out or dealing with an estate left to you in trust; whether you collect pink or blue diamonds, antique gems and watches, Prada handbags, Modern British artists or fine whisky – the value of your investments will continue to change as the world changes. The perfection inherent in your collection may be timeless, but ensure you keep its value front of mind - keep up with change, build your knowledge and expert relationships, and make sure your valuations are up-to-date.

Fine wine is still a reliable and consistent investment, but the importance of receiving excellent and impartial advice and appraisal is crucial, given the number of unscrupulous wine

merchants and investment houses out there. Financial maturity is linked to drinking maturity (8-10 years) and provenance of correct storage is vital. Regular appraisal and valuation by independent experts on storage, value, condition and the market will help you insure your fine wine collection adequately and give you peace of mind.

The rare whisky market is booming, but also polarizing. Quality and rarity are still the most desirable qualities of this simple market with easy and affordable entrance and exit routes. Capital appreciation is always the aim (the only dividends being the opening of an occasional bottle).

ell.

Fine wine is still a reliable and consistent investment, but the importance of receiving excellent and impartial advice and appraisal is crucial. Financial maturity is linked to drinking maturity (8-10 years) and provenance of correct storage is vital.

I consider myself to be incredibly fortunate. As an independent valuer of jewellery and watches, it is my privilege to come across various beautiful and one-off pieces, sharing in the wonderful stories and history each piece has.

Jewellery is often more highly sentimentally charged and personally prized than other forms of art or luxury items. Should a piece be lost or damaged, the sentimental value is often irreplaceable. It is of some comfort then that a client will at least receive the right amount in compensation if they are insured with an up-to-date valuation in a changing market.

That’s where I come in. It’s my job to know this market inside out and how it will impact the

value of any piece that may come under my eye.

The diamond market

There’s no denying that diamonds have a timeless beauty that transcends all fashion and trends.

But this ageless quality does not render them immune to market fluctuations. Indeed, if you’ve a piece valued between 2015 and 2018, it’s very likely to be undervalued as the market has picked up again since then. If your valuation is even older, your piece may now be worth much more than you are aware: one of the biggest hikes was seen between 2005 and 2010.

Red is the rarest colour

Then, of course, there’s the type of diamond being valued. Remarkably, coloured diamonds are still relatively underappreciated by many clients and the wider population, but their unique beauty is undeniable.

Colour in a diamond usually results from a chemical impurity such as nitrogen causing yellow or boron causing blue. Red diamonds, however, have no such impurity in their chemical composition. Instead, the colour is due to a very rare deformation in the pure carbon atomic

structure – essentially atoms have slipped or been misplaced. This defect causes light to bend in a way that our eyes see the colour red.

The sapphire surge

Blue sapphires remain by far the best seller in the coloured gemstone market, with the finer grade sapphires such as Burmese and Ceylon continuing to increase in value.

In fact, last year the hammer price for natural unheated sapphires kept overtaking their auction estimates by 3-5 times. Kashmir sapphires are still the most valuable and have become incredibly rare – so knowing the origin of your sapphire can make a vast difference in its value.

Looking wider to the branded market, pieces by luxury jewellers such as Cartier, Bulgari and

For what it’s worth - Sonia Fazlali-Zadeh, jewellery specialist and valuer at Gurr Johns

The exquisite red diamond is the rarest and most valuable. Broadly speaking, they are valued at approximately $1 million per carat

Chopard increase on a yearly basis. A client’s current insurance replacement figure can quite quickly become woefully insufficient, especially for vintage pieces and newer branded pieces that have become discontinued.

Regular appraisals recommended

In my experience, I often value items that have not been appraised for many years, with some even still insured under the original purchase receipt of more than a decade ago. The danger being that you could be seriously under-insured and face the double disappointment of financial loss as well as the sentimental cost.

Not only does an up-to-date valuation help avoid having to make up any cost difference or accept a lesser quality item as a replacement, it also gives a chance for the jewellery to be checked over for potential loose settings or necessary repair work. This can avoid that sinking feeling when you look at your beautiful diamond ring

only to see an empty space where your precious stone once sat.

Authenticity assured

A valuer will also confirm the authenticity of a gemstone and its certificate. It’s a part of the industry I wish did not exist, but fakes are out there. The industry as a whole has seen a marked increase in the number of fake certificates or certificates from disreputable sources that claim a gemstone is something it is not – whether that is in relation to treatments, enhancements, quality grades or actual composition.

Show it off

Jewellery is a passion of mine, as it is for any collector or gifter. But as with any real treasure, we can have a tendency to lock it away for safekeeping, be it in a safe or a dusty shoe box. My advice for you is to get it out – let it be seen and appreciated. And if it is great-grandmother’s

tiara that you think you will never wear, have it remodelled so it can be enjoyed by yourself and others. These beautiful items deserve the attention. But please, whatever the piece, don’t forget to have it valued first.

An up-to-date valuation helps avoid having to make up any cost difference or accept a lesser quality item as a replacement.

Blackstone Consultancy provides individuals and companies with bespoke, discreet and exceptionally vigilant security arrangements. The Spear’s 500 guide 2019 recognises Blackstone Consultancy as one of the very best security and intelligence providers for private clients.

The firm’s tailored private services include, but are not limited to: personal protection, building safety, asset security, reputation protection, surveillance and investigations. More information can be found at: blackstoneconsultancy.com. Building a picture of an individual’s life is not as simple as a quick Google search. The majority of criminals are low tech and opportunistic. However, we have seen a marked rise in professional attacks against properties and people. The worst part, creating a profile of you online may only take 30-40 minutes.

These individuals spend a significant amount of time planning precisely who to target and when they will launch their attack, calculating the risk of getting caught against the potential rewards. They will aim to know their target inside out – including their habits, the layout of their property, and an idea of their wealth.

We conduct security checks for our clients to identify where their weaknesses lie in the eyes of cyber criminals. By understanding their vulnerabilities, we learn how to protect them and their families.

The rest of this article highlights how a burglar might target a person from the 2019 Sunday Times Rich List. We have amalgamated interviews with several criminal individuals to create a story on overshare and lack of security, but being careful not to identify any one individual.

A well-known businessman was featured, along with his wife in a glossy magazine. The interview was conducted in their home and numerous internal and external photos of the property were featured. The article also gave the name of the Home Counties village that the property was located within.

From this, an experienced criminal would be able to spot and identify the security features. In this example, the ShatterPro Glassbreak Sensor (glass break sensors) appeared dated and to have been painted over. The same can be said for the Viper GLX Shock Sensors on the windows – these would set off the alarm system following excessive window vibrations. The photos of the exterior show that the property does have CCTV, but it is an old system which will not be connected to your IP Internet address.

The magazine article showed that the businessman was married and had three

children – a son in his twenties and two younger daughters.

‘I knew their names but not ages. The older son had a Facebook account with limited security settings, an Instagram account which was open to the public and an open Twitter account. Photos showed that the family went skiing in Verbier every January, (staying in the same chalet), and also spent the summer months

This is how criminal gangs are targeting people – By Blackstone Consultancy

on the family yacht in the French Riviera. I was able to go back as far as 2011 and see that these holidays took place at the same time each year. I could now schedule when I wanted to conduct the burglary.’

The oversharing of information on social media is a significant problem. ‘Generation Overshare’ are often providing an excessive amount of compromising material online and it is common for privacy settings on social media accounts to be limited. This information makes the job of criminals significantly easier, giving them immediate access to the pattern of life of the family.

‘I was able to find an Instagram account of the other daughter. She had recently posted a photograph of her with her parents at sports day. By viewing the comments made by friends, I was able to establish the name of the school she attended. It was a private school with fees of £8,000 per term.’

The cost of her school fees would reaffirm to a burglar the wealth of the family. It must be emphasised that this information would be significantly harder to come across if social media privacy settings were tighter.

‘The social media accounts that I identified also provided photos from both within the property and in the garden, including a video of a party at the ‘property.’

‘The video showed three rooms on the ground floor. I was able to see two contemporary paintings on the wall and got more of an insight into the layout of the property.’

Knowing the layout of a property is crucial to the burglar. Given the limited time that they will have to operate, they will need to be in and out of the property within approximately 15 minutes (varies depending on police response time).

‘Having already obtained the name and email address of the target couple, I was able to link the male to an account on Strava. This is an app for cyclists and runners. You can search the details of activities and routes undertaken by anybody with an account. We were able to establish that he goes for a 25-mile cycle near to the property, starting at approximately 0800hrs on Saturdays.’

Gaining more information on their pattern of life gives the burglar a detailed timeline of when the family are not in the property. During the final stages of targeting, the burglar can take this into account when conducting hostile reconnaissance on site.

‘I wanted to find out more information on the exact address of the target. Using their names and dates of birth, it was easy to identify it through various open-source databases. For a small cost, it is possible to confirm the target’s address, and any other addresses they and their family are linked to.’

These basic property searches are low hanging fruit for burglars. Within a matter of minutes, they can obtain and confirm addresses, occupants, and the amount of money paid for the property. This can then be followed up by further searches to enhance the information.

‘After confirming the address, I looked on Companies House for all businesses registered to the family. I found that though many were registered to accountants’ addresses, or buildings in London, both the husband and wife had one business registered to their home address. The wife’s business was related to Pilates. Further research showed that she runs a small class in the nearby village twice a week – on Thursday and Saturday mornings between 0800 and 1030hrs.’

‘Linking this to the activities of her husband, we could see that both of them would be out at the same time on Saturday mornings.’We always recommend that businesses are registered to the address of an accountant. Having a business linked to your home address is visible online to anyone who is interested.

‘I then went about obtaining as much

information on the house as possible through

open source data searches. Property sale

websites often provide a current estimation of

the value of any house, as well as providing

photographs of the interior, exterior and a

floorplan for the entire house. In this case I

was able to obtain information, including an attractive property value, pictures of various rooms and a detailed floor plan.’

Being able to view these photographs and a floorplan can further help the burglar to know exactly where they need to go once they gain access. This will, again, ensure that the amount of time they spend within the property is limited.

‘Before moving on, I checked on the website of the local council to see if any recent

planning applications for the property had been approved. I found a recent example that provided very detailed plans of the current and proposed floor plan including; the grounds, perimeter security fencing and the location of a large safe!’

Having easily obtained the target’s address, a burglar would have been able to build a detailed picture of the house and its surrounding grounds. They will know where the bedrooms and dressing rooms are (which is most likely where valuables such as jewels will be kept). Furthermore, in this example they would know exactly where the safe is located.

‘To add to the information already gathered, I proceeded to obtain both satellite and street imagery of the exterior of the property using Google Maps. The imagery can be cross referenced with mapping provided on the

planning application to confirm the locations of features such as entrances and exterior security features. In this case, I was able to identify an alarm system attached to the front of the property.’

This reconnaissance phase complements and supports the previous information found via planning applications and other means. It allows the burglar to visualise their target and identify possible weak points that could be exploited for entry, such as low hanging branches in the garden area, broken fence panels/garden gates, or a lack of external lighting.

‘After identifying the alarm, I decided that I would prefer to attack the property while the occupants are not in. To facilitate this, I will have to tamper with the alarm system. A common method used by criminals is to fire the foam balls from a nerf-gun into the property. I know that the Viper GLX Shock Sensors will set off the alarm

upon impact. Doing this three to four times in the space of a month to six weeks will mean that the alarm provider disconnects the property from their immediate alarm care system. Knowing that the family will be going on their summer holidays to the French Riviera in the next few weeks, I will be able to aim for this time frame.’

Tampering with the alarm system will limit the attention the burglar is given while committing the burglary. The neighbours, for example, will likely be desensitised to the alarm and are unlikely to go to the property after the first or second occasion that it goes off.

‘Before committing a burglary, I always view the target property in person. The easiest way to do this is by pretending to be a delivery driver. Seeing through their windows initially, and then through the open door will give me a greater understanding of what I will face in the coming days.’

People usually open their door for delivery drivers. Even if the ‘delivery’ is not addressed to you, people often have a discussion with the delivery driver. This gives a few seconds to look inside the property. With the growth of smart technology, including smart locks, people may allow delivery drivers in remotely to leave the parcel inside. This will lead to further risks for property owners.

‘Planning to avoid the police is my next step.’‘In the case of this target property, the nearest police station is located in a town which is 10-miles away. I can report a fake incident near to the property in order to test a rough time of their response. Furthermore, on the day of the robbery, I would plan to report another fake incident to the local police, or have associates start a brawl in the local town. Such an action will slow down their response time

and divert their resources elsewhere, thereby inhibiting their capabilities.’

We estimate that the online targeting process described above would take 30-40 minutes.

For further cyber information, visit: www.ecclesiastical.com/cybersafety

Ecclesiastical Insurance Office plc (EIO) Reg. No. 24869. Registered in England at Beaufort House, Brunswick Road, Gloucester, GL11JZ, United Kingdom. EIO is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference Number 113848.

We’d love to tell you more - please contact the Art & Private Client Team on:

0345 608 0069 New business: quotes@ecclesiastical.comExisting business: existingbusiness@ecclesiastical.comwww.ecclesiastical.com/artandprivateclient

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