To protect their artistic heritage, more and more collectors are opting for specialized insurance. Conventional fire policies do not cover enough of this type of property.
“Belgium harbors an enormously rich artistic heritage”, explain Timothy Broos and Peter Stevens. Their employer, the London Stock Exchange listed company Hiscox, is one of the largest art insurers in the world. “This heritage is also more important than we presume because many works remain hidden, they continue. More and more works of which we did not suspect the existence are coming to the surface. The implications taxation of poorly thought-out estate planning are certainly not unrelated to this.They encourage more and more collectors to include their works of art in the planning of their estate.This requires a precise valuation of the works. This often reveals a much higher value than expected. The owners suddenly realize that the works are not sufficiently insured. Result: the demand for insurance specializing in works of art explodes.”
“Belgium harbors an enormously rich artistic heritage”, explain Timothy Broos and Peter Stevens. Their employer, the London Stock Exchange listed company Hiscox, is one of the largest art insurers in the world. “This heritage is also more important than we presume because many works remain hidden, they continue. More and more works of which we did not suspect the existence are coming to the surface. The implications taxation of poorly thought-out estate planning are certainly not unrelated to this.They encourage more and more collectors to include their works of art in the planning of their estate.This requires a precise valuation of the works. This often reveals a much higher value than expected. The owners suddenly realize that the works are not sufficiently insured. Result: the demand for insurance specializing in works of art explodes.” “The growing interest in art as a form of investment is also fueling the demand for specialized insurance,” says Frédéric de Haan, managing director of insurer Vander Haeghen. Established in Brussels, it works with more than 700 brokers in Belgium. “Because of low rates, individuals are increasingly turning to other investment products, such as vintage cars or works of art, to diversify their wealth. And as the rise in the offer online has made it more accessible, art has entered the crosshairs of more enthusiasts, and working from home allows collectors to devote more attention to their possessions. wondering whether their works are sufficiently assured.” “The growth in sales of works of art is also fueling the subscription of specialized policies, confirms Jan Van Hecke, specialist in art and insurance at Vanbreda Risk & Benefits, which also offers tailor-made insurance. The two phenomena do not however, are not directly proportional because, despite the efforts of specialist insurers and brokers, work of art insurance is not yet sufficiently well known, and the benefits of such policies are not fully appreciated. It is a policy based on the principle that all risks are covered, with the exception of a few specific exclusions such as willful damage or poor preservation. “Through the fire policy, non-specialist insurers offer very limited cover which is often no less expensive than the premium requested by an insurer specializing in works of art with broader conditions, says Jan Van Hecke. moreover, a traditional fire insurance always comes with an excess, which is generally not the case for specific policies for works.In the segment of collections of at least 10 works with a value of more than 100,000 euros , the penetration of works of art insurance does not exceed 50% in Belgium. In the category up to 1 million euros, I estimate that specialized policies do not exceed 33%.” “Awareness is also necessary for collections belonging to companies, remarks Jan Van Hecke. Companies believe, often even more than private individuals, that the fire policy offers sufficient protection. that some of them are still not or not sufficiently insured Museums and other cultural institutions generally insure their long-term loans and loans for temporary exhibitions, but only because the lender requires it. sufficient budget, it is impossible for some museums to insure the most beautiful works of a permanent collection. As a result, it often happens that the real masterpieces are not or are only partially insured, for example only at the restoration value.” The Vanbreda expert stresses that the authorities are not standing idly by. “The Flemish government, for example, has promulgated a decree relating to indemnities. In the case of temporary exhibitions, the Region bears part of the risk of works of art taken on loan, a private insurance institution covering the rest. The objective is to enable museums to bear the cost of private insurance for the most prestigious exhibitions and thus to obtain the most beautiful works.” “The main competitor of the insurer specializing in works of art remains the absence of insurance or underinsurance”, confirm Timothy Broos and Peter Stevens, of Hiscox. This under-insurance means that the fine art insurance market still holds great potential, especially if interest in tangible investments increases further. “It is estimated that around 10% of the assets of the wealthiest Belgians already consist of jewellery, coins or collector cars and works of art. The rise of a category of new wealthy art lovers should further increase this percentage, especially in the current context of low interest rates”, predicts Frédéric de Haan. “In recent years, we have recorded annual growth of 10 to 12% in Belgium. We believe that it will continue at this rate in the years to come. On the one hand because we expect to see more hidden works will come to the surface in the years to come, on the other hand because we see that more and more young people are interested in the art world and are investing in art”, explains Timothy Broos. “When the galleries closed during the covid period, online sales exploded. Quite rich catalogs were put on this market and buyers quickly became familiar with this new type of transaction, especially the youngest. Since then, there is a tendency to trust auction houses more quickly, in particular because the quality of the photos of the works offered is improving.Today, it is not uncommon to make an offer without having personally evaluated the work , which was much less the case before,” explains Frédéric de Haan. According to an international study by Hiscox, online transactions now account for a quarter of art sales. While they weighed 6.8 billion dollars in the first half of last year, they have already reached more than 13 billion dollars today. Of the three major auction houses (Sotheby’s, Christie’s and Philips), Sotheby’s comes out on top. The prestigious auction house accounts for 65% of the online sales of the three big houses. Also in these three auction rooms, the average amount of an online transaction was $25,000 last year. In 2019, it was still less than $9,000, the Hiscox study learns. At Hiscox, a young person who has built up a collection worth 50,000 euros and wants to insure it will pay an annual premium of 219.80 euros, including taxes and fees, via the specific Young Collections policy. Vanbreda Risk & Benefits applies a minimum annual premium of 250 euros, including taxes and costs, for an insured capital of works of art of less than 100,000 euros. For a collection of 50,000 euros, Vander Haeghen asks for a premium of 168 euros, including taxes and costs. Insurers point out, however, that they offer several types of policies tailored to works of art. For details, you can visit their website. “So far, works of art insurance has hardly suffered the impact of the hardening of the insurance market that has been going on for a few years, especially when compared with cyber insurance and fire insurance. In these segments, premiums are on the rise and the underwriting conditions are becoming more and more stringent”, explains Jan Van Hecke. However, an increase in premiums for work of art insurance in the wake of other policies seems inevitable. “The increasing number of natural disasters increases the risks of reinsurance. This phenomenon could affect the premiums of work of art insurance. In addition, the material and the transport are more and more expensive. The price of wood has increased enormously , and by extension that of the wooden crates in which the works of art are transported. The internationalization of the market, and in particular the growing demand for works of art in Asia, has increased transport. But an increase in premiums does not would only be a normalization of the situation, since the premiums for work of art insurance have not followed the rises in premiums on other markets in recent years,” said Timothy Broos.