Insurance for artwork ready for take-off

Insurance for fine arts, though nascent in China, has great potential as demand for protection for invaluable art from damage or theft is high, while relevant financial products are in short supply, experts said.

In November, jewelry pieces valued at more than 1 billion euros ($1.1 billion) were stolen from the Green Vault of Dresden Castle in Germany.

In April, the oak-framed roof of Notre Dame Cathedral in Paris was burned to the ground in a blaze, causing immeasurable loss.

China also reported several fires at some historic relic sites in Sichuan, Fujian, Jiangxi and Zhejiang provinces in the first half of this year.

Art pieces, while in storage, transit, exhibition, loading and unloading, face multiple risks, from natural disasters to accidents such as fire, explosion, flood, robbery, collision and breakage.

Art insurance is regarded as the most direct and efficient way to control such risks and help policyholders gain economic compensation afterwards, according to Yang Hongbo, general manager of property insurance business of TK.cn, a subsidiary of Chinese major insurer Taikang Insurance Group.

Last year, China had more than 5,000 museums, which organized over 26,000 exhibitions that attracted about 1.1 billion visits, data from the National Cultural Heritage Administration showed.

China was also mentioned in a report of the Hurun Research Institute as the second-largest artwork auction market in 2018 with 29 percent market share globally, trailing only the United States.

The frequent exposure and trade of art suggest a strong demand for related insurance services.

"It's a promising business. Besides museums, galleries, agents, logistic companies and individual collectors are potential clients for artwork insurance," said Wang Guojun, a finance professor at the University of International Business and Economics in Beijing.

"China's artwork market develops fast. It is no exaggeration to say that insurance for fine arts is in high demand."

However, only a few insurers in China have provided such services so far due to the high premium, ordinary awareness levels among art collectors and lack of related talent, laws and regulations, experts said.

Besides, to do such business, insurers have to be able to tell the authenticity of the artwork, asses its value, review risk factors, assess the loss and give solutions for restoration and compensation, which makes the entry barriers high, said Yang.

That's why, some policyholders seek the help of foreign insurers, and some give up on the idea of getting their artworks insured, he said.

TK.cn released its artwork insurance product in late 2018 to target both companies and individuals, according to Yang.

The services include delivery of exhibits, tracking of transportation, survey of the exhibition hall and training of the audience to observe the artwork in a proper way, to conduct risk assessment and control from the preparatory stage of the exhibition, he said.

It provided services to British artist David Hockney's first exhibition in China, which was held in Beijing from August and will be concluded in January; exhibitors and collectors of the 2019 Guardian Fine Art Asia, one of the top antique and design art fairs in China; and the Jupiter Museum of Arts in Shenzhen, which displayed 104 works from 60 modern Chinese artists from December this year to April.

In November, the horse head bronze statue from Beijing's Old Summer Palace was exhibited at the National Museum of China. Wang Lu, manager of non-automobile insurance underwriting department of the Beijing branch of Huatai Insurance Group, told Beijing Youth Daily that the company's insurance products covered risk during the transportation of the exhibit and the exhibition period.

He Hongkai, head of underwriting of cultural relics and artworks of Switzerland-based insurance company Chubb, said as China is actively participating in the global artwork development, more Chinese collect and invest in artworks, and the fine arts insurance is being accepted by more people.

Wang said the business, though with high premium and revenue, carries high risk. He suggested insurers should employ more experts in both insurance and art, and adopt technological tools to enhance risk management.

"The circumstances for each artwork can be quite different. For example, porcelain is susceptible to damage from vibrations; calligraphy and painting should be protected from water or improper lighting; sheepskin is affected by coldness and dryness," he said, adding insurers need to have a professional team to provide targeted services each time.

He said premiums for art insurance policies are defined by the value of artworks and the difficulty involved in safeguarding them.