McTear’s auction house in Glasgow lost 300 pieces of jewellery in a robbery

More than 300 items — including rings, earrings, necklaces and bracelets — were stolen from Glasgow auction house McTear’s in a 2012 robbery. The thief or thieves were never caught.

For an auction house and its clients, such incidents are the stuff of nightmares.

Andrew Cheney, a former auctioneer who now works for Hiscox, the insurance company, notes how vulnerable auction houses are: “You are advertising very publicly all the goodies and rare treasure coming up for auction, and a long way in advance,” he says.

“There is quite literally a burglar’s shopping list.”

Jewellery, he adds, is an attractive target as it is so small that a large number of items can easily fit into a briefcase. It is also becoming more valuable.

“The value of items being insured is still rising,” says Robert Korzinek, an underwriter at insurer WR Berkley.

“Art and jewellery have been a pretty good investment. Auction turnover has been increasing, and that increases premiums.”

According to the Knight Frank Luxury Investment Index, jewellery has increased in value by 142 per cent over the past decade, a better performance than art, antique furniture or Chinese ceramics. Watches are up 65 per cent in the same period.

It is unsurprising, then, that auction houses and their insurers are going to ever greater lengths to protect the items entrusted to them by customers.

The first step is for the insurer to check exactly what they will be insuring.

Anne Rappa, an insurance broker with Aon, says: “An on-site review is part of an intake process for a new client. There are often recommendations made and they are happily met — everyone is invested in the protection of the property.”

Mr Cheney is one of those responsible for assessing the property.

“When it comes to security, you apply a ‘concentric circles’ approach,” he says, in which several layers of security sit between the outside world and the items under the auction house’s care. “The layers, you hope, wear the criminal down.”

The levels start with perimeter protection, such as fencing. Some auction houses also put up bollards outside the main entrance. “Ram raids are a violent means of entry, but pretty effective,” says Mr Cheney.

Then there are security shutters over the windows and grilles over the doors.

“When you get inside the building, you need more layers of security between the public spaces, where the viewing and sale takes place, and the back office,” says Mr Cheney.

Some jewellery departments have so-called airlocks — two sets of doors with a holding area between. Only when the first set of doors has closed and the identity of the person has been verified will the second door open.

Then there are the places where the items are stored. “We’d expect strongrooms, vaults and safes, depending on the value of the property being insured,” says Mr Korzinek.

The biggest and most secure vaults can weigh up to 25 tons, according to Mr Cheney, so auction houses need to think about their flooring before having them installed. They may also need to anchor them to the floor.

Many vaults have vibration sensors that can detect if someone is trying to drill in from the outside. These are connected to alarm systems that in turn can be linked to the police. Vaults can have internal CCTV systems, too, so any activity can be monitored, as well as climate control to protect items that need a specific temperature or humidity.

Safes and vaults are usually given a grading or “cash rating” — the amount of cash they can store securely according to insurers — granted by independent agencies such as BRE in the UK and VDS in Germany.

“The test will give a cash rating. We will then use multipliers based on the other security features at that location to give a valuables rating,” says Mr Cheney. The valuables rating is used to determine how much the insurer will cover inside the safe.

David Allaway, a specialist at UK-based Richard Thompson Insurance Brokers, explains: “For a cash rating of £1,000, you might be able to keep £10,000 of stock in there. It will be based on the quality of the safe.”

The strength of the physical security features is not the only thing that insurance companies look at. For Mr Korzinek, the processes inside the auction house are just as important.

“The most common source of insurance claim is accidental damage. Things can get damaged when they are being moved around, and in auction houses things are being moved a lot,” he says.

Proper processes can also help prevent thefts that are more subtle than a forced break-in.

“A large auction house has a large number of staff moving in and out of the building,” says Mr Korzinek. “Theft does not happen very often but when it does there is often an element of inside activity.”

That is where technology comes in, he adds. “With digital CCTV and digital access codes it has become easier to track what employees are doing and who is enabling and disabling the systems.”

So-called sleight-of-hand thefts, where teams of people try to distract staff as they are showing items to customers, can largely be avoided by following correct procedure.

Some of these processes are very low-tech — some auction houses put large paddles on each item of jewellery, for instance, making them difficult to conceal in a pocket or up a sleeve.

Mr Korzinek points out that thefts of items are rare but often well publicised, so the items can be difficult to sell on.

This creates favourable conditions for insurance companies, who areonly too happy to receive the custom of auction houses dealing in watches and jewellery.

Ms Rappa says: “Because this line of business has . . . high valuations but low loss ratios, it is deemed to be very profitable for the underwriters.”

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