Towards the end of last year, Nick Brett - our Head of Fine Art here at HDI Global Specialty – featured on the expert panel of a seminar hosted by the Institute of Art & Law in association with Clyde & Co. The seminar focused on issues affecting commercial art insurance and topics covered included:

  • What does a commercial gallery look for in an insurance policy?
  • What issues are most overlooked when clients obtains insurance cover?
  • What are the underwriters’ expectations of their insured?

If you missed the session itself, below we have summarised some of Nick’s key points.

Assessing Fine Art risks

Compared to financial services, the fine art trade is lightly regulated. This, Nick argued, means that having a high trust relationship between the insured, the broker and the insurer takes on even more importance. “All we want, as an underwriter that specialises in this area, is for the client to be open and straight-forward. We need to know all about the risk to understand it – we need this transparency and, as a result, we may advise you that you do not need to use insurance to cover all of your risks.”

Nick emphasised that the core conditions of a dealer’s insurance policy place important obligations on the dealers themselves. That is, there is an onus on dealers to take reasonable care to disclose all relevant facts, to state correctly sums insured, to keep up-to-date stock records and to undertake health and safety risk assessments . “We also need clients to embrace money laundering due diligence” he added, “an area we in the financial services sector are very familiar with following years of regulation.”

Another key area is that of transits – a risk central to the art trade. Nick, whose family were dealers themselves, said it was key that dealers struck the right balance when seeking competitive pricing for shipping and packing. “The reality is that if dealers compromise on shipping and packaging quality it is bad news for us all; increased claims costs for the insurer and increased premiums for the insured.”

Handling Fine Art claims

Recalling his personal experience on the other side of the fence, Nick said he knew that when it came to claims, two sticking points were often around disagreements over depreciation of an item following damage and a mistaken belief that a claim settlement was something that should require haggling.

He said the best way to avoid disappointment over depreciation was to use an experienced insurer who understood the market; and in order to avoid general disputes over quantum, to submit accurate figures rather than over-stating anything in the expectation of being knocked down. “It all comes back to having a trusting relationship between the insured and the insurer”.

Fine Art insurance requires a specialist insurer

With diverse subject matter, high values, and the need for proactive risk management and specialist claims handling, Fine Art is a complex class of business. HDI’s team of experienced market leaders are well-versed in providing outstanding service to brokers and clients.

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