- Covea Insurance
- Feb 18
- 3 min read
Gold bullion – the changing market
Changing Investment Behaviour in Volatile Markets
In periods of market volatility, client behaviour can shift quickly. Over the last 12–18 months we’ve seen a noticeable uptick in enquiries relating to physical gold holdings – from small private investors buying a few sovereigns through to significant values in the form of bullion bars.
Why Clients View Physical Gold Differently to Equities
For many, it’s a straightforward reaction to uncertainty. Equity markets feel exposed to geopolitical tension, inflationary pressure and interest rate movements. Physical gold, by contrast, is perceived as tangible, portable and insulated from corporate or market performance. It doesn’t default, dilute or de-list. Clients see it as something they can hold, store and, if needed, liquidate quickly.
When Financial Assets Become Physical Risk
That behavioural shift has implications for customers, brokers and insurers alike, particularly when those assets sit outside traditional financial products and move into the world of physical property risk.
From an insurance perspective, bullion is very different to stocks and shares. Shares are typically covered indirectly through financial services protections or investment structures. Physical gold, however, creates a real, concentrated theft and loss exposure. A £50,000 equity portfolio doesn’t attract a burglar. A £50,000 gold bar in a desk drawer does.
The Importance of Early Broker Conversations
This is where early broker conversations make a material difference.
We’re seeing three common scenarios.
Common Scenario One: Underinsured
Clients who have quietly accumulated gold bullion coins and assume their policy will automatically respond. It’s important that any collection is properly valued and an inventory completed so insurers can understand the total value, the make up and individual values in the collection, where the items are stored, whether they’re moved and the likelihood of further additions. Without specification on the policy, underinsurance and issues at claim stage becomes a risk.
Common Scenario Two: As long as it's in a safe, it's safe.
Clients assuming that storing in home safes is acceptable without appreciating safe grading requirements. From an underwriting perspective, the differences in safes can materially change both risk acceptance and rating.
Furthermore, for larger exposures of gold, storage in bank vaults or other approved facilities would be the best solution to ensure customers don’t become a target for theft.
Common Scenario Three: Off-Site Storage Assumptions
Clients storing bullion off-site in vaults or other safety deposit facilities but not checking that the arrangements are adequate from an insurer perspective.
Cover can be provided under high net worth policies as long as the storage facility is considered satisfactory, but not all vaults and storage facilities are considered equal which is why it’s important to check and agree this upfront.
Questions Brokers Should Be Asking
For brokers, this is an opportunity is to be proactive. At new business or renewal, it’s worth asking questions like, “do you hold any precious metals, coins or bullion as well as your jewellery?” and then ask for the full details including storage.
Clients don’t always categorise gold as jewellery or collectibles, so it can slip through.
What Underwriters Need to Understand About the Risk
From an underwriting standpoint, we typically assess:
Total value and full details up of the collection,
Valuations aspects – when, by whom,
The form of gold held (i.e. coins vs bars vs mixed holdings),
Storage location(s),
Home security including physical security, safes, alarms,
Frequency of movement or transportation.
The Often Overlooked Risk: Transportation and Movement
Movement risk is often overlooked. Transporting bullion between properties, banks or dealers materially increases exposure, so understanding this aspect is also important.
Claims Experience: Why Bullion Losses Are Different
Losses involving bullion tend to be severe. There’s rarely partial damage; it’s usually total theft or unexplained disappearance. Recovery rates are low because bullion is easily melted down or sold on. That makes accurate sums insured, clear documentation and robust security critical.
Documentation, Valuation and Proof Challenges
We also see challenges around proof of ownership and valuation; bullion claims rely on purchase records, certification and spot prices at the time of loss. Where documentation is incomplete, the settlement process can become slower and more complicated.
Practical Risk Management Guidance for Clients
For Private Clients, we’re encouraging:
Regular re-valuation and retention of purchase records,
Photographs and serial numbers for bullion bars where applicable,
Appropriate safe or vault storage and prior agreement with us regarding suitability,
Explicit specification on the schedule of collections of gold bullion coins/bars.
Supporting Better Investment Protection, Not Discouraging It
None of this is about discouraging clients from diversifying into gold. For many, it’s a rational hedge. Our role collectively is simply to ensure their insurance arrangements keep pace with their investment decisions.
Why Early Conversations Prevent Difficult Claims Conversations
If you’re seeing increased bullion ownership or would like to sense-check a particular risk profile, our underwriting team is always happy to talk through appropriate security standards and cover structures. A short conversation upfront is far easier than a difficult one at claim stage.
