VI. THE INSURANCE INDUSTRY
Every work of art is unique and irreplaceable. Archaeological finds (antiquities), medieval
manuscripts. . .paintingsand prints, not forgetting furniture and art-and-craft objects such as porcelain and silver, are irreplaceable cultural assets. They should be protected and preserved. Moreover, despite the tendency of prices on the art market to fall in the recent past, works of art constitute great assets. . . .Thereforeinsurance of art means above all: taking precautions to prevent or minimize loss.1
Dr. Rolf Wickenkamp,
Nordstern Allgemeine Versicherungs
The true scale of the illicit trade in cultural objects is hard to assess, and so too are the resulting losses sustained by insurance companies. In the Lloyd's market, the majority of fine art claims are subsumed within marine cargo losses, while among the composite insurance companies art and antiques are often covered under general household contents policies. James Emson of the Art Loss Register has observed that
with the possible exception of the big three fine art underwriters, none of
the. . . insurancecompanies writing household contents, fine art or jewellers block policies, that I have visited, appeared to have any detailed statistics about their losses for art, antiques and collectibles.2
Philip Saunders, writing in Trace in 1989, pointed out that "it is no use trying to describe a work of art or antique after it has been stolen. Then, only approximations can be given. Descriptions should be compiled when an object is bought or inherited." Saunders observed that "some [insurance] companies presume that owners take these precautions as a matter of course but this is rarely the case."3 David Scully, of Nordstern Insurance (U.K.), has also stressed the importance of making descriptions of valuable objects:
There is absolutely no point in advertising the theft of a Victorian side table, as hundreds circulate within the antiques trade each week. However, if an exact description is given, including measurements and condition, a recovery may be possible. If it is accompanied by a clear photograph, showing any distinguishing marks, the odds shorten even more: too often insurers have to make do with an out-of-focus background shot from a family album.4
It has been argued that "in the world of fine art insurance, it is worth putting a great deal of time and resources into recovery of stolen property. Recoveries save the insurer money in the long run, and a good record of finding what is lost for policyholders brings in more customers."5 Thus, the insurance industry can, through its individual insurance companies, professional bodies, and umbrella organizations, make an important contribution to the protection of art and antiquities. Indeed, David Scully suggests that "Insurers are in a unique position to provide risk prevention guidance because of the volume and variety of risks seen and the experience with them."6 There is a growing recognition that "art owners need to develop a holistic approach to their individual risk management that combines a number of different layers and types of protection which together form an effective barrier."7 Robert Page, of Hiscox Syndicates Ltd., believes that insurers, and their supporting brokers, have an opportunity to add value to their product offerings in the area of risk management advice.8
An important element in any such holistic approach to risk management should be encouraging clients to make adequate descriptions of objects of importance. The Metropolitan Police (U.K.) has urged insurers to offer discounted premiums to owners who take the time and trouble to photograph and catalogue their art and antiques.9 A number of underwriters offer reduced rates for clients who document their valuables, while some brokers offer valuation services. However, many within the industry are aware that more needs to be done to persuade clients that it is in their interest to document important possessions to an adequate standard. Peter-Wolfgang Marx, of Nordstern (Germany), argues that "Besides international cooperation, especially with the police, the insurance industry has to get together to establish standards on documentation using today's technologies."10
Questionnaire Survey of the Insurance Industry
The insurance industry's views on the information needed to describe objects has been obtained by a combination of research, interviews, and a questionnaire survey. Those interviewed included brokers, underwriters, and loss adjusters. Forty-nine responses were received from companies in ten countries. All of the Object ID categories about which they were questioned were approved by 90 percent to 100 percent of respondents. Participants in this survey were not asked about Distinguishing Features because this category had not been suggested for inclusion at the time the survey was conducted (See Section III).
Four categories not selected for Object ID scored more than 80 percent, these being Object Name (100%), Date Documented (73%), Cross Reference to Related Objects (79%), and Related Written Material (67%). The categories of information on which there was the lowest level of agreement were Estimated Value (59%), Acquisition (55%), and Normal Location of Object (51%). Estimated Value was rejected on the grounds that values change over time, and because the basis of the valuation affects the estimated value of any given object (see Section V). There was some concern that the holding of information on the estimated value of objects could result in organizations being drawn into legal actions:
[Estimated Value] could be a serious problem, since if it appeared on any records, the records and the organization keeping them could find themselves embroiled in litigation in the event of a loss. This would be particularly true if there were a disagreement between the insurer and the insured as to the value. If an estimated value of the object had been filed with some organization, that document and its organization could be subject to subpoena and find themselves involved in an unwanted litigation exercise.11
A number of respondents rejected Acquisition because they believed that this information could be sensitive and could only be divulged at the discretion of the owner. Normal Location of Object was rejected by some because of concern about the security implications of this information, particularly in the case of private collections.
Table 8. Summary of Findings of Questionnaire Survey of Experts in Art Insurance Category of Information Percentage
Type of Object 100 Materials & Techniques 100 Measurements 100 Maker 100 Object Name 100 Title 100
Description 98 Inscriptions & Markings 96 Photographs 94 Date or Period 92 Subject 90
Cross Reference to Related Objects 79 Object ID Number 78 Date Documented 73 Condition of Object 73
Custodian of Object 68 Related Written Material 67 Place of Origin/Discovery 65 Recorder's Name 63 Legal Status of Object 61
Estimated Value 59 Acquisition 55 Normal Location of Object 51
Object ID categories are in bold.
Lloyd's of London Roundtable Meeting of Art Insurers
The findings of the insurance questionnaire and the other surveys were reviewed by a roundtable meeting of art insurers held at Lloyd's of London, March 28, 1996. The meeting was organized in collaboration with the insurance committee of the Council for the Prevention of Art Theft (CoPAT). Those present included insurance brokers, under-writers, and loss adjusters, as well as a member of the Art and Antiques Focus Group at Scotland Yard (Metropolitan Police).
In his opening remarks, the chairman of CoPAT urged that the large, non-specialist insurance companies be made aware that art theft was a major issue, and one that they should take more notice of than they do at present. Part of the problem, he argued, was one of perception. He believed that many insurance companies think of art only in terms of expensive paintings and therefore do not see themselves as art insurers. As a result, while these insurers don't believe that they insure much art, the reality is that in most thefts, 25 percent to 50 percent of the total value of the claims concern jewelry, silver, clocks, and bronzes. Moreover, these companies don't know what art theft costs them because the data are mixed up with other losses. He saw the recovery of stolen works of art as hindered very seriously by inadequate descriptions:
The insurance industry can do a lot to help itself. We can join in this project and agree on a standard for the description of objects. If we have good descriptions, we can make better use of the facilities which are now available, such as the Art Loss Register and Trace.
One participant believed that the insurance industry was not without blame for the "tremendous losses in art":
I would say this for the following reasons: we have written insurance polices on expensive fine art with little or no description of the art whatsoever, such as, "One Rembrandt painting." We have underwritten art on the basis of pieces of paper that are so-called appraisals, from people about whom we know nothing. We have also accepted it with no proper descriptions, much less pictures. We have even underwritten massive fine art business without the schedule even being in the possession of the underwriter. We have underwritten insurance on fine arts involving significant values, with the security taken to protect that art against burglary and theft, fire and water almost non-existent.
He went on to argue that "It should become an industry-wide standard to properly describe art on the insurance policy and to properly protect it. I think we have a duty here that transcends any duty to stockholders, or to names, and that's to protect art for humanity."
There was general agreement on the desirability of establishing a standard for describing art objects: "If we, as specialist loss adjusters, specialist brokers, specialist insurance companies which have fine art divisions, don't set those standards, who else is going to do it?"
While the technical problems of sharing information were seen as solved, the need was voiced for standards to enable the technology to be used to good effect:
Many of us have computer systems which enable us to have images on our
screens. . .andalso to send information, via the Internet, to any other part of the world. These problems are being overcome quickly. . .Themore serious problem is how to define the categories.
A discussion followed on the categories of information that the questionnaire survey identified as important. A photograph, it was agreed, should always form a part of the record of an object. In addition to its value as a means of assisting in recovery of stolen objects, one loss adjuster saw a second advantage for insurers having good, detailed photographs of art works and objects, namely the detection of fraudulent claims. Photographs can show whether damage to an object existed before the insurance policy covering it was written. The member of Art and Antiques Focus Group reminded the meeting that law-enforcement officers are not trained in art, and that, therefore, they "rely very heavily on accurate descriptions and particularly on distinguishing features to be able to identify property which may be stolen."
Participants agreed on the need for Distinguishing Features because it focused attention on the features of the object that could identify it uniquely.
There was general agreement that if the proposed standard were to be successful, it would have to be simple. An over-complicated proposal "would not get to first base with the insurance industry." Those present agreed that the following categories of information were desirable, and believed the first eight to be essential:
Type of Object
Materials & Techniques
Inscriptions & Markings
Maker of Object
In concluding, meeting attendees strongly endorsed the need for the standard, and proposed that insurance companies adopt it and recommend its use to clients. One participant called it a serious effort to thwart the theft of art and "the one that probably has the most reasonable chance of success." The member of the Art and Antiques Focus Group argued that
This documentation standard, which can be recommended to the client by the insurers, will lead to a significant increase in the number of recoveries, where those crime prevention measures which the insurers insisted on in the first place have been overcome.
He added that the project was "extremely valuable to law-enforcement as well as to the insurance industry." The meeting agreed on the urgent need for underwriters and brokers to educate the public about the importance of documenting their valuables. One practical suggestion was that the standard be a part of a printed form, or checklist, that insurers could send out with insurance proposals.12
- Click here for a list of participants in Art Insurance Specialists' Roundtable Meeting, Lloyd's of London, March 28, 1996
- Click here for a list of Respondents to Questionnaire Survey of Art Insurance Specialists
1 R. Wickenkamp, "Art and Insurance," Etudes et dossiers No. 172 (Geneva: Geneva Association, 1992), 87-92.
2 J. Emson, "From Theft to Recovery," Art Theft and its Control Conference, London, November 1995.
3 Trace, June 1989.
4 D. Scully, "Going, going to the black market," Insurance Day, November 15, 1995.
5 Journal of Commerce, June 1993.
6 D. Scully, op. cit.
8 R. Page, "The importance of tightening up security," Insurance Day, November 15, 1995.
9 Charles Hill, quoted in Sunday Times, October 15, 1995.
10 W.P. Marx, "Improvement to Risk Management and Security: The Influence of the Insurance Industry," Art Theft and its Control Conference, London, November 1995.
11 Harold Smith, Smith's Adjusters Inc., New York.
12 The client could be advised to make as many photocopies of the form as she/he had objects to document.
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Protecting Cultural Objects in the Global Information Society Copyright © 1997 The J. Paul Getty Trust