By: Tarina Vlok, Managing Director of Elite Risk Acceptances

Beware of bagging a bargain - the rising risks of insuring fake luxury goods

The recent global uproar over claims that some luxury handbags – including the coveted Birkin – may be manufactured in China has reignited an age-old debate: what truly defines luxury in today’s globalised world?

According to Tarina Vlok, Managing Director of Elite Risk Acceptances – a specialist high-net-worth insurer and a subsidiary of Old Mutual Insure, the lines between luxury, authenticity, and perceived value are blurring. Is it still ‘luxury’ if it’s made in a mass-production factory overseas – even if the price tag still screams exclusivity?

“The definition of luxury is evolving – from heritage craftsmanship to hype-driven resale culture – so understanding what you're actually buying, and insuring, is more important than ever.”

Earlier this year many TikTok users were flooded with videos of Chinese manufacturers offering popular luxury and fashion items at a fraction of the normal selling price in a bid to capitalise on Trump’s announcement that imported goods from China will attract a tariff. The idea being you buy “direct” from the source, hence bagging a bargain deal. Some of the prices dropped from $38 000 for a luxury bag to $1 400 for brands such as Hermes, Chanel and Louis Vuitton. The problem? These were found to be counterfeit goods being sold by syndicates or manufacturers of fake luxury.

The problem is also widespread at home: In late 2024 Western Cape police found counterfeit luxury goods worth around R55 million, and according to research by Luxity, one out of every three luxury items submitted for resale is fake. According to the Consumer Goods Council of South Africa (CGCSA), it is estimated that counterfeiting could account for as much as 10% of the South African economy.

“It must be remembered that if it is too good to be true, it usually is,” says Vlok. “It is also worthwhile to remember that specialist insurers can reject a claim if an item is found to be inauthentic or a replica. It’s a necessary move in a world where counterfeit goods can pass as the real deal, and where even well-heeled buyers can be misled.”

She says that it is important to remember that if wanting to claim for a loss, an insurer may request the client to prove that a missing luxury item is in fact real.

"Specialist insurers, in particular, will often request specific documentation. For example, with high-demand items like Rolex watches—where counterfeits are common—we may ask for an original purchase invoice, a valuation certificate, or even the original box the item came in."

The lesson? Whether it’s a Hermès Birkin or a bespoke piece from a rising South African designer, the onus is on consumers to verify authenticity and understand the value of what they own.

“Luxury is no longer just about price,” says Vlok. “It’s about provenance, craftsmanship, exclusivity, and consumer trust. As an insurer, our role is to protect genuine value.

Below are her top tips to help you ensure you protect the real thing:

• When buying a luxury item, closely examine it for logo authenticity, material quality and craftmanship.
• Do research before buying an item, especially if you are planning to spend a lot of money. Ensure that you know the unique details of the brand in question, e.g., stitching, leather quality and logo placement.
• Luxury items usually come with high-end packaging, dust bags, or care instructions. If the packaging feels off, chances are that the item is a replica or counterfeit.
• Consider the price. If it’s too good to be true, it is. Luxury items will never be sold at very low prices, even if they were pre-owned.
• Buy only from reputable retailers, preferably from the brand themselves, and avoid buying through social media.
• Always keep your purchase receipt when buying expensive items.
• Make sure that your items are insured at replacement value.
• Ensure that you choose an insurer who understands the value and replacement of luxury goods.