When Monet Shook Hands With Surety

“An artist is somebody who produces things that people  don’t need to have.”

- Andy Warhol

The recent fire incident at Notre Dame Cathedral in Paris last month ended up destroying several timeless works of art, which were priceless.

Now, the question is, were those artefacts insured?

While there is no concrete answer to it, the importance of art insurance cannot be ignored. Needless to say, exquisite works of art are forever and we find the famous Romantic poet John Keats debating the supremacy of ideal art over nature in his poem Ode On a Grecian Urn.

While art insurance has gradually started gaining prominence in other countries, it is still in its nascent stage in India. It is quite surprising that India, which has a very strong history of art and culture, something like art insurance is rather unheard of. The culture to insure art is yet to evolve, unless it is from a renowned artist. Art collectors rarely purchase an insurance policy for their valued possessions and hence, most high-value collections continue to  remain uninsured.

“There is a need to push art insurance, given the lack of awareness among Indian collectors about the product and the coverage it offers. That said there is no culture of purchasing art insurance naturally among Indian collectors unless they are approached and provided information regarding the benefits of insuring their valuables,” said Anurag Rastogi, member of Executive Management, HDFC ERGO General Insurance.

In the recent times, confiscated and auctioned art collection by absconding jeweller Nirav Modi grabbed substantial attention. The collection included works of VS Gaitonde, FN Souza, Raja Ravi Varma, Jogen Chowdhury, Akbar Padamsee, KK Hebbar and Arpana Caur among others.

Only around 10 per cent of all collectors in India get their valuable collections insured, said Shweta Jain, Founder, Investography. However, renowned art houses do opt for art insurance.

Art insurance offers full coverage for the loss or damage of the artefacts covered under the policy. This covers accidental damage and the theft of valuables; while they may be at the collector’s premises, or in transit, or in possession of a third party who has been entrusted with the valuables.

“Art insurance policies cover perils like theft, fire, natural calamities and transit. It is basically an all risk cover except few named exclusions, which include natural deterioration, damage caused by aridity or humidity and transit in unattended vehicle. The policy also covers automatic coverage of the newly bought artworks for 60 days period,” said Subrata Mondal, Executive Vice President, Underwriting, IFFCO Tokio General Insurance. He further added that seasoned collectors already know the importance of buying specific art insurance while small collectors have the option of insuring their collection within the home policy.

Evaluation of any artefact is done on the basis of estimation certificate, issued by professional valuers. In case a valuation certificate is not available with  the collector, a risk profiling of the client is done and based on it, the policy is issued, which is as per  the market value of the artefact,  said Rastogi.

“Value of the painting or artefact is evaluated on the basis of valuation report of authorised art valuers or invoice of the painting or artefacts. There is no standard premium rate, but it depends primarily on coverage to be offered, type of assets to be insured, security and protection measures available at the premises, sum insured per article or per location, whether it is kept at one place or moved to different places for exhibition,” said Shreeraj Deshpande, Principal Officer and CEO (Officiating), Future Generali India Insurance.

The premium rates also depend on the collection value, nature of works like if the collection is of more framed paintings or more sculptures or more artefacts, how easily breakable are these, the material it is made up of and also dependent on the location, at which collection is kept, how frequent is the transit between multiple locations of the insured, security features of the location and details of any previous losses.

In case of theft or loss, people need to apply for claims. However, there is an inquiry done before the payment can be made.

Often people carry expensive arts and artefacts while travelling to a different country. What happens to the insurance coverage then? Deshpande said insurance can be extended to cover transit risk also. Client needs to specifically inform insurer about the same. Any addition or changes such as a shift in location can be included subject to prior intimation.

Future Generali is in the business of art insurance for the last 11 years and the company is bullish on the future growth prospect of art insurance in India. “Indian economic growth, increase in capacity to buy high value artefacts and unveiled market prompted us to start this stream of insurance. Still small segment is covered under art insurance since there is lot of undisclosed art in India,” he added.

Art insurance policy offers a worldwide coverage. Hence, if artefacts are damaged or stolen while in transit from one country to another, they will be covered under the policy, said Rastogi.

HDFC ERGO has been offering art insurance since 2013. Explaining what propelled HDFC ERGO to take part in this business, he said, “Globally, fine art is a huge market and with India’s rich cultural background, it extends to valuables beyond paintings like antiques, valuable property and furniture, sculptures, statues, jewellery and coins among others.”

“The Indian market for art or valuables has grown significantly over the past few years with Indian collectors; both private as well as corporate; spending enormously to have valuables in their possession. But possessing such high-valued items makes them prone to its inherent exposures such as theft and damage, and hence the need to insure them. Moreover, there is also a huge potential for insurance of such valuables among art traders as well,” Rastogi added.

The art insurance portfolio of HDFC ERGO has been growing at approximately 35 per cent over the past five years. On the other hand, IFFCO Tokio General Insurance, which has been in this business since 2008, has registered a  growth rate of around 20 per cent every year.

The company has many offerings for the art market including policies for collectors, which include plans for both individuals and corporate collectors; policy for dealers; standalone policy for big art exhibitions or auctions and policy for museums.

When asked whether the cost of art insurance for individual and corporate vary, Future Generali’s Deshpande said there is no differential cover or plan for individual or corporate collectors.

aparajita@outlookindia.com