Art boom creates insurance demand
An Irma Stern ‘Still Life with Gladioli’ recently sold at auction for R7,57m setting a new record for South African art whose proponents include such illustrious names as Pierneef, Boonzaaier and Laubser.
Seemingly recession proof, South African art continues to enjoy growing demand both at home and abroad and values continue to escalate. As recently as November 1999 the R1m barrier was breached for the first time, again, as it happens, for an Irma Stern still life. Since then it has been a tale of growing demand and along with it, exponential increases in insurable risk.
Against this background the need for specialised insurance has taken on fresh dimension and scope according to Mandy Barrett of Aon South Africa.
She identifies the market among individuals, corporates, auctioneers, antique and art dealers and so on and she makes the point that art cover requires appropriate broker intervention.
“Specialised underwriting managers in this field, such as Artinsure with whom we place our commercial and personal fine art book, will tell you that prices are determined by among other factors the nature of the piece, the size of the collection and the risk management applied to protect the item or items.
Fundamentally risk arises from theft, loss or damage and typically cover involves the likes of all risks, away from premises cover, transit cover and depreciation, she says.
Art theft is also on the rise worldwide, according to a statement issued in June by Artinsure after another artwork was stolen from a Johannesburg auctioneer. Artinsure have warned that the frequency of art thefts in South Africa and worldwide is rising and the public needs to be cautious if they are offered art at values that seem too good to be true. Thirty-two art works had been placed on Artinsure's theft register for South Africa in the last three months. According to the FBI, art theft is a lucrative criminal enterprise, with estimated losses running as high as $6bn (about R40bn) annually worldwide.
“For the knowledgeable art thief it’s easy to store an asset such as this until the time is ripe to sell it to the reportedly growing black market in art and artifacts.
“That’s notwithstanding interventions such as the Art Loss Register, which has auction houses Sotheby’s and Christie’s as shareholders.
“Moreover, the art world has been rocked recently by cases of fraud and it’s become necessary to provide for defective title cover for ownership dispute to protect against cases such as this.”
Insuring art and antiques is very different to conventional short term insurance Barrett stresses. Factors such as the value of pairs and sets has to be understood and correctly priced to ensure adequate cover.
“It’s all about specialised knowledge and experience and this market is very different when compared with insuring everyday household items or physical assets such as vehicles or property.
“There’s also a need nowadays for expanded benefits and value adds such as cover for temporary storage should a client’s premises be compromised.
“It’s all about providing a true value proposition based on a working knowledge of the art business and with thousands of South Africans now owning art collections and their importance as asset portfolios growing, there is a need for world class insurance solutions for those who collect, sell, create, restore, exhibit or transport works of art, antiques, collectables and other high value memorabilia.”
South African art risk has largely been placed internationally in the past she says, but that’s changing. More and more risk is being written locally and that’s helped to contain premiums.
She also points out that, in the past, insurance companies would insure art as part of the contents of a home or an office but recent years have seen the advent of specialised covers for items that are rare, valuable or collectable.
