The boom in the attraction to laboratory grown diamond has prompted a warning from insurers to their high net worth personal and business customers.
Recent years have seen a huge spike in demand for lab grown diamonds and the ethical issues of diamond mining become an important buying choice.
Lab-grown diamonds popularity is due to their near-exact similarity to natural diamonds and lower cost. Plus, they are guaranteed to be free of a steep ethical price tag.
Lab diamonds mimic the natural pressure exerted on the mixture of carbon, nitrogen, and sometimes boron to create a diamond. However they come without the cloud that natural diamonds now suffer under.
Historically, the diamond industry has long been mired in concerns over unethical practices, with many mines historically located in regions where unregulated trade has been carried out by rebel fighter groups. These rebels enlist local civilians to work in highly unsafe and inhumane conditions, digging for hours for precious stones.
Steps have been taken to tackle the issues with the European Union creating its Kimberley certification scheme in an effort to halt the trade of ‘blood’ or ‘conflict’ diamonds sourced from places such as Angola, Ivory Coast, Sierra Leone, Liberia, Guinea, and Guinea-Bissau during the 19th-century, the true source of most precious stones remains difficult to pin down.
The rise in attraction of lab grown diamonds has prompted high net worth UK insurer NFU Mutual to warn that proper certification is vital, as prices for natural and lab grown varieties differ greatly.
Lab grown diamonds are made by imitating the natural process in which natural diamonds are formed, applying immense heat and pressure to carbon to create a glistening stone. Whereas natural diamonds form over billions of years, lab grown diamonds can be made in a matter of weeks. The resulting product is still a diamond – and can appear visually identical to a natural diamond – but can be worth significantly less.
Jewellery expert and fellow of the Jewellery Valuers Association, Lynn Tones, provides the example of a one carat natural diamond ring, valued at over £15,000, and an identical one carat lab grown diamond ring valued at under £7,000.
Dawn Blazier, head of Bespoke Insurance at NFU Mutual, explained: “The key thing here is scarcity. The high value of natural diamonds is due in large part to the fact they are a finite resource, whereas lab grown diamonds can be quickly produced and will likely decrease in relative value as more and more are made.
“Given the similarity between natural and lab grown stones, this makes retaining or getting certification or accurate valuation all the more important. If you lose a natural diamond you will not want it replaced with a lab grown diamond, and similarly it is important that it is insured for the true value.
“But it works both ways – if you are insuring a lab grown diamond, you will not want to pay more than you need to, given the replacement will be much lower than a natural diamond.
“For insurers, and this is something we are doing at NFU Mutual, it is vital that we are aware of this new industry and make sure customers provide certification where possible and regular valuation, allowing us to adequately protect their most treasured possessions.”