A study of the importance of fine art insurance for peace of mind in the art world

Abstract

This research aims at identifying key risks and risk perceptions for those holders of fine art. It also tries to determine factors that must be considered for the underwriting of fine art insurance policies, i.e. valuation risk exposure. The author will also establish whether risks when holding art and valuation risks exposures will be influenced by demographic variables, such as age, level of education and industry. In doing so, the author aims to formulate a model that may be used by underwriters for the possible introduction of fine art insurance policies, to a country rich in both culture and art.

The research was carried out through the use of interviews and questionnaires. The interviews were held with individuals who worked in the insurance or art industries, while questionnaires were distributed to the general public.

The findings show that generally, people rated the risks present in the art market as being of a medium risk, with art deterioration being considered as high risk. The three main risks as highlighted by the mean results were art deterioration, art fraud, and art theft. In relation to the valuation risk exposures, forgery seemed to be the biggest concern, and thus increases the exposure for insurers, while the fact that art may in some cases be considered an investment, was the factor that decreases the exposure the most. It was noted that certain factors were influenced by demographic variables.

The results from this study provide a foundation on which such a policy can be considered to be introduced in Malta. Both the risk factors and the underwriting considerations as seen from the data collected from the Maltese population, as well as people working in relevant industries, provide us with an indication of what needs to be taken into account when offering fine art insurance.