KKVG #1 Apr 2012

Art transports by sea: niche for professionals or culture-threatening nuisance? - was the title of the first Cologne Art Insurance Talk initiated and organised by Zilkens Fine Art as part of Art Cologne. Around 120 top-class guests from the insurance industry (primary insurers, reinsurers, art experts, academics, specialist lawyers, registrars), from cultural enterprises (galleries, museums, corporate collections) and from the transport industry accepted the invitation to Cologne and engaged in a controversial discussion about the demands placed on modern art logistics from a cost and risk perspective. It was striking how little useful statistical material the insurance industry had for the question. At the end of the event, all participants agreed above all that high-quality art should only be transported by sea in exceptional cases.

According to the insurance representatives (Allianz, Axa Art, Nationale Suisse, Gothaer), these exceptions are exclusively due to the size or weight of the work of art to be transported: A statue weighing nine tonnes and ten metres high cannot be transported by plane from Hamburg to New York, for example. Otherwise, air freight should be preferred to sea freight wherever possible.

The reasons given are manifold:

• Compared to air freight, sea freight represents three times the total loss risk for insurers.
• Even without a total loss: the forces that can act on an ocean-going vessel and endanger the art objects are incalculable and unavoidable. This is expressed in a statistically unproven tenfold higher risk of damage.
• General average costs are distributed according to the value of the cargo. Since art usually has a much more expensive value than the goods normally transported on an ocean-going vessel, in the event of engine damage or stranding, the owner participates with a high contribution to the rescue costs even without damage to the work of art having occurred. Dr Bodo Sartorius of Axa Art described a case in which the insurer had to pay one million euros.
• The tracking of a sea container is - compared to an air freight package - incomparably more intransparent due to possible stopovers and reloading processes.
• Last but not least, there is a lack of specialised carriers for art transports by sea.

Nevertheless, there is no formal underwriting exclusion of sea transport for art goods in reinsurance. Insurers decide individually whether they are prepared to insure set transports.

Major cultural events under heavy cost pressure

The representatives of the museums and galleries emphasised one aspect that makes the sea transport of art goods well worth considering: the cost pressure that major cultural events are under in times of high expectations and tight public coffers. The transport costs by air are on average seven times higher than the costs for transport in an overseas container. This obscures the view of some non-specialist cost managers on the risk situation. It became clear that exhibition curators and managers often have to consider logistics and insurance issues in the conception of their exhibitions under cost aspects rather than art-specific risk aspects due to political pressure. This could change, because the risk awareness for the endangerment of art objects through improper transport is increasing. The topic of risk management is gradually gaining importance in the museum and exhibition landscape. As an important, non-material factor in the transport of art, the representatives of the galleries and museums emphasised the contact with the few specialised art forwarding agencies, which, with their specialist knowledge, ensure that our cultural heritage does not come to harm when travelling. Their professional understanding has a lasting effect on the development of art exhibition insurance premiums.

This is shown by a comparison of a very similarly conceived exhibition in 1980 and 2005. The Tut-ench-Amun exhibition in Hamburg in 1980 was insured for 15 million euros, which amounted to an insurance premium of 42,000 euros. The similar exhibition 25 years later in Bonn was insured for 540 million euros, with a premium of 400,000 euros. This corresponds to a rate reduction of 75 per cent.

In general, the participants in the discussion noted an increase in the value of the art markets. The insurance value of a high-profile art fair, such as TEFAF in Maastricht, can be estimated at three billion dollars. This is approximately three times the annual worldwide premium volume for the insurance of art worldwide. Sales in global art markets have exploded since 2000, rising to $64 billion (2011). At the height of the economic and financial crisis in 2009, global art sales were just shy of $40 billion.

Shift in global sales

Global art market turnover and its locales are shifting. China's market share is growing, the US market share is declining. These shifts are also a reason why global transport chains for art logistics are being examined from a cost perspective and why sea transport is entering the considerations of the art world ? especially galleries ? as an alternative. Young galleries in particular are dependent on low-cost transport routes in order to enter the international market, emphasised Aurel Scheibler, Deputy Chairman of the Federal Association of German Galleries (BDVG), during the discussion.

The representatives of museums and art shipping companies stressed that the most important thing in art transport is the best possible packaging of the respective work of art. In this area, it was not possible to exercise sufficient expertise and care. Examples were cited in which, due to proper packaging, blatant transport damage to works of art was avoided despite unfavourable external influences.

Zilkens Fine Art Insurancebroker GmbH advises those involved in these processes and ensures optimal insurance protection.

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