Art as an Investment and Insurance, Yazzy's at www.williamverdult.com
Friday, December 4, 2009 at 09:32AM 
Most recently, according to the Artprice.com charting service, the price of art sold at auction increased 9 percent in the first eight months of this year over the sales recorded in the same year-earlier period. One disquieting element in the arts-prices equation is the resurfacing of talk of art as an investment. Perhaps it was inevitable, with art prices on the march even before the great expectations for the fall auctions, and with stock markets in the United States gyrating without a sense of direction.
More than ever, the toughest questions museum officers and trustees now confront when dealing with fine-arts insurance matters are: What type of policy should be purchased, what should that insurance policy cover, and how can the most effective policy be established?
With few exceptions, most museums and other non-profit groups opt for "all-risk" policies to protect their fine-arts collection. At Hiscox Syndicate 33, says Read, "all risk" literally means coverage of "all physical damage." Terrorism coverage, however, is an exclusion. On commercial risks, the category in which museums fall, the insurer has added a "nuclear/chemical/biological contamination" exclusion.
Until Sept. 11, terrorism insurance was routinely included in most "all-risk" policies. But after the World Trade Center attacks, many insurers began requiring that terrorism insurance be treated as an exclusion--and usually an expensive one. So in November 2002, the U.S. government stepped in and enacted the Terrorism Risk Insurance Act (TRIA), which requires insurers to offer some form of terrorism insurance to their clients, who are free to accept or reject it.
TERROR AND COSTS
"In early 2003 or so, many U.S. carriers insuring museum collections relaxed and decided to just offer TRIA and simply went back to offering pre-9/11 coverage," observes Robert F. Salmon, managing director, Willis Fine Art, Jewelry and specie. (See separate story on terrorism insurance above.)
"One thing I would like to stress," adds Straus, who started her career as a risk manager at Harvard University, "is that fine-arts insurance is one of the best values available in the insurance market. Prices are, comparatively, very inexpensive."
Most experts see rates for museums with good financial track record, and wealthy individual collectors, in the range of 1 percent to 5 percent of the appraised value of their entire collection, without any deductibles.
One very powerful and encouraging new force on the art and art-insurance scene is the Internet. "More and more, when a work of art has been stolen, information about the theft is quickly posted on the Internet," says attorney Hodes.
The most important Internet clearinghouse for information about fine art and antiques theft, and recoveries, is the The Art Loss Register (www.artloss.com). The Register and its site, known in the art world as the Scotland Yard of art theft, was created through a partnership of leading auction houses and art trade associations, insurance companies, and the International Foundation for Art Research.
The Web site contains an exhaustive list of stolen works of art, but, encouragingly, it also bills something called "Featured Recovery."
For example, there is the remarkable tale of a Picasso painting entitled "Buste de Femme," which vanished after the fall of Marcos in the Philippines. The painting was registered in Art Loss Register's database in 1986. It was searched by the Register and an auction house in 1998 prior to sale and was matched with the Picasso from the Philippines. The painting was sold at auction in 1999 for $992,500 including premium, and the proceeds went to the Philippines government.
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