Fine art insurance market: “Insurers are knocking on our doors”

“Insurers are knocking on our doors and asking for business.”

Fine art insurance market: “Insurers are knocking on our doors”

Insurance News

By Sam Boyer

Last month, a $10 million reward payment was offered by the Isabella Stewart Gardner Museum in Boston for the return of about $500 million worth of artwork stolen from the premises in 1990.

Thieves posing as Boston cops stole 13 artworks, including works by Rembrandt, Manet, and Vermeer. The reward was originally $5 million, but was doubled this May.

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Laymen outside the high-net niche “fine art” insurance sector often figure the industry is busy battling a sophisticated criminal underworld hell-bent on art crime capers – but that’s rarely the case. Robberies such as that at the Isabella Stewart Gardner Museum are uncommon, and when it comes to insurance for precious collectibles the claims usually stem from accidental damage.

Michael Fischman, fine art broker and area executive vice president of Arthur J. Gallagher, said most claims happen after transit mishaps.

“Claims occur in transit, mostly, when things get moved,” he said. “They get pack inadequately, or the truck leaks and there’s water damage in the truck, or they hit a bump and it comes out of the frame … or just generally rough handling.”

Andrew Mitchell, fine art underwriter at Hiscox, in London, UK, said “accidental damage” was the most common claim he saw, too.

“The main driver of fine art claims is accidental damage, rather than any of the sexier crime-based [losses],” he explained. “And that’s usually something that happens during the course of transit – when you’re moving anything, that’s when you’re at the most risk of dropping, or impact, or loss, or any of those things. So about 50% of our claims come from accidental damage. Unfortunately that’s just part and parcel of operating in that market with high-value, potentially fragile items.”

In the current soft insurance market, generally, where there is “tremendous” capacity, competition among insurers in the US art market is strong, Fischman said – with several big brands including XL Catlin, AXA, Chubb, and AIG all competing for contracts.

“Insurers are knocking on our doors and asking for business,” he said. “Everybody really wants the business because it’s clean. It traditionally runs very low loss ratios. There’s no tail … there’s no lawsuits, there’s no liabilities that come later. At the end of the year you know exactly what losses you occurred and you know where your profit was.”

Mitchell agreed the US fine art market was strong: “With regards to the US, I would love to write more business there. The problem I’ve got is that it’s already a very developed, mature market. As far as art insurance is concerned - there’s some extremely strong and respectable players in that market and, frankly, a lot of collectors and museums and dealers are insuring locally, for the same reasons that the clients that are here [in the UK] are insuring with us.”

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