AI-Generated Appraisals, Replica Luxury Goods, and the Growing Risk to Insurers

In the last several years, the landscape of luxury-goods fraud has changed dramatically. Replica watches, counterfeit jewelry, and even lab-grown diamonds presented as earth-mined stones have reached a level of sophistication that makes them extremely difficult to distinguish from the real thing.

The quality of these fakes—the weight, the finish, the engravings, the “serial numbers”—has improved to the point that even experienced collectors and jewelers often need detailed inspections or lab analysis to confirm authenticity.

Compounding the issue, these counterfeit items rarely appear on their own. They are accompanied by receipts, warranty cards, and appraisals that look fully legitimate. Entire online communities now produce videos teaching viewers how to spot high-quality replicas, which is telling: the fraudsters are not operating in the shadows, they are operating in the open because the products are convincing enough to create real doubt.

But the most concerning development isn’t just the physical replicas. It is the AI-generated documentation designed to validate them.

With access to a template from a luxury retailer or jeweler, someone can generate a flawless appraisal in minutes. AI fills in model numbers, grading language, serial-number formats, metals, weights, and even the signature block of a supposed appraiser. These documents are polished enough that many look better than the originals. A fraudster can buy a $200–$500 replica watch or lab-grown diamond, attach an $8,000–$15,000 “appraisal,” schedule it under a personal articles policy, and later file a theft claim. The insurer is left holding the loss.

This is exactly the type of scheme that blindsides insurance companies, particularly those serving high-net-worth clients. The era when a clean PDF or a printed receipt could be trusted is over. Today’s documentation looks perfect because it was engineered to be perfect. Carriers now find themselves trying to balance two competing demands: maintaining a high-service, low-friction client experience while simultaneously defending against increasingly sophisticated fraud that bypasses traditional checks. Luxury goods cannot be treated like ordinary contents claims anymore. The exposure is too high, and the fraud is too refined. To protect themselves, insurers must strengthen the front end of their process. Several controls are quickly becoming non-negotiable:

1. Require trusted, independent appraisals.

Not all appraisals are equal. Carriers should rely on certified, independent experts who know how to authenticate both the asset and the paperwork. Retail sales slips or generic documents are no longer sufficient.

2. Demand layered documentation.

Legitimate items leave a trail: detailed photographs, serial-number confirmation, gem-lab reports, payment records, and prior service history. Fraud rarely survives that level of scrutiny.

3. Use technology to counter AI.

Metadata analysis, document forensics, and pattern recognition tools can detect forged appraisals and edited PDFs with far greater precision than manual review.

4. Prioritize pre-loss verification and secure storage.

Authenticating items before they are insured is the strongest hedge against six-figure losses. Equally important is storing verified documentation so that, in the event of a claim, there is no delay, confusion, or suspicion from SIU teams.

5. Maintain clear chain-of-custody for appraisals.

An appraisal’s value is tied not only to what it says but to who created it and how it was handled. A documented chain of custody eliminates doubt and accelerates claims handling. The reality is straightforward: fraud has evolved, and it is accelerating. Between replica luxury items, misrepresented lab-grown diamonds, and AI-generated paperwork, insurers must transition from document-based trust to evidence-based verification.

This is exactly why services that use trusted appraisers, meticulous documentation, and secure digital archiving are becoming essential. Insurers who strengthen their verification processes now will be the ones who avoid costly surprises later.