< KKVG 2017
Insurers don’t bet?!
Insurance in times of Uncertainty”…
… Is a rhetorical trick: Uncertainty is the key business concept of each insurance. And this was exactly the key topic of the 6th Cologne Art Insurance-Talk, organized by Zilkens Fine Art Insurance broker, during the 51st Art Cologne Fair.
More than 150 participants from Germany, Austria, Liechtenstein, Luxembourg and Switzerland were welcomed to this talk which is by now an important date in art insurance scene.
The business model in the insurance scene is the ability to measure and foresee uncertainty. Although with 1, 7 billion $ worldwide premium revenue the art insurance scene is a quite small sector compared to the enormous insurance market. Nevertheless in times of low interest rates the art insurance scene becomes quite interesting for floating capital.
Therefore reliable data and a reliable general set-up is crucial for this sector. The relevant surveys are based to a great extent on own researches on that topic – unfortunately they are experiencing a very low response rate. Due to that fact analysis, like Tefaf Art Market Report or Art Basel Report fail to provide reliable data.
Not a few market participants have no interest in the attempt to make the insurance sector more transparent, predictable and subsequently safer.
The scientific research concerning the art market at the university is still at the very beginning. Nevertheless, referring to Prof. Nadine Oberste-Hetbleck from University Cologne, it is evident, that political and economic changes always have had an impact on the art market, although without being able to find a specific pattern within or to quantify it.
Kilian Jay von Seldeneck from Kunsthaus Lempertz points out, that the investment in art not only holds an emotional dividend, moreover it is seen as safe harbor protecting the art against state intervention.
The recent developments in the legislation, precisely the cultural heritage law, led to uncertainty amongst the collectors. As a reaction towards it, Lempertz will relocate the department for Asian art to their office in Brussels.
The whole market reacted to this new law in that way, that it transferred a considerable part of its activities abroad.
This new law is indeed a factor of uncertainty and it is, according to many participants of the market, above all useful for the transport companies, who are shipping the objects to foreign countries. This however has again a bad impact on the whole art market, since the purpose of acquiring art is definitely not to lock it away in far storages in order to preserve if from the State, but they are also de facto taken away from the owner.
The effect of the cultural heritage law, which is considered by some as an attack on their private property, cannot be insured. According to Kai Kuklinski, CEO AXA Art, there are no policies for loss through law. “Insurer don’t bet”.
Technological progress is considered as an additional factor for uncertainty. The art market as well as the insurer are still at war with the internet.
Younger clients are using new information- and distribution channels as they are keen to diversify their portfolio with regards to maintain the value of it, like design, wine, and classic cars.
Change in taste also holds a certain uncertainty.
In order to keep the dynamics in collection down across generations, these collections have to „breathe”, which means: buying from primary market, selling in secondary market, reinvesting the results again in primary market.
Daniel Hug, Director of Art Cologne, refers to collectors who are hoping for declining prices on the contemporary art market, so they can afford it again.
However, once you understand uncertainty as a fluctuation in taste, the perspective changes entirely. From that point of view, uncertainty holds chances, because one can discover objects in rather neglected areas for reasonable prices.
On the other hand, at the high end of the auction market, one single person can decide over success or failure of the entire season, when they either decide to bid on a top lot or to neglect it.
For insiders spectacular bankruptcies, like the case Auctionata, are hardly surprising. Daniel Hug believes, that the online art market will face massive changes, because the internet will change rapidly in the near future. It will be common practice, that art objects are replicated with a 3D-printer.
These developments will affect the entire art market, including the art insurance sector. One of the key challenges for the insurance market is to cope with the digitalization and to develop new products in this context. Besides the need for specialized consultancy will increase clearly.
The music industry, who denied at first the digital revolution until it got overrun by change and by now pours forth prophecies of doom, should be seen as a warning.
Right at the moment the fear of terrorism is a subject which should be taken into account as soon as exhibitions are organized in remote places. Indeed, the risk can be insured, but major events like Art Cologne, where enormous amounts of values gather, are particularly challenging.
The art market itself is in a state of flux due to the, either felt or truly changed, security situation. Therefore collectors from the United States with all their assets travel less and consequently art fairs found spin-offs in order to move towards to the collectors.
According to Birgit Rolfes, Head of Artima Art Insurance at Mannheimer Versicherung, Art Insurance will always be a people business, because it’s not about standardized products, moreover it’s about objects to which clients have an emotional relation. Therefore for any insurance, they expect a highly individual service.
More information on
Zilkens Fine Art Insurance Broker Gmbh
info@Zilkensfineart.com Phone: +49 221 800 68420 – Frau Teichner
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