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Zilkens' News Blog

Dr. Stephan Zilkens

Stephan Zilkens

Zilkens' News Blog 22 2022

Dear readers,

This Monday, too, Kobel's Kunstwoche appears fresh and lively with a plenitude of commented news on the art market.

Unfortunately, we have to deal with a risk that millions of Europeans have only known about for decades from the news, because direct experience, depending on one's own age, goes back to one's great-great-great-grandparents - in other words, it no longer exists in the collective memory. Those who still learned transport insurance knew that the risk of war could be included under certain conditions on sea and air transport. War on land could also be insured if it could be assumed to a high degree that the route had been cleared of mines and bombs. Insurers always have a special right of cancellation of 2 days, which applies to transports that have not yet begun at the time of cancellation. The German Transport Insurance Conditions speak of war and tools of war and mean the direct damage caused by these events. However, there are also clauses that formulate the exclusion of the risk due to all direct and indirect effects on a loss event. Consequently, resourceful lawyers interpret this as follows: There is a fire in Idontwanttopayviallge in e.g. Germany, the volunteer fire brigade consists of 90% Ukrainians who have travelled to their home country to defend our freedom there. Consequence: the house burns down, the insurer does not pay because the indirect influence of the war is argued. The fact that a short circuit caused the damage is no longer of interest. In life insurance, too, war is considered an uninsurable event. Indirect events are not considered, for good reason, because it is impossible to ruin the reputation of the insurance industry better than by excluding indirect influences of anything. Indirectly, many things can be deduced and therefore give good reason to rather deny a claim to the customer in order to have to pay less in the end. In the context of the war in Ukraine, the insurance industry fears having to pay claims in some lines of business. However, it should think very carefully about how far it will let itself be driven by lawyers who define its scope as "indirect".

At this point, a second misunderstanding becomes apparent that politicians have produced in the guise of compliance rules or the governance code out of a lack of understanding of the facts. The absolute separation of sales, operations and claims leads to independence, which is not good for the industry. Claim is the realisation of the product. Operations develops the products and formulates the conditions. In the event of a claim, however, there is a strict separation between the two areas. And claims like to resort to lawyers and experts because they need something for the file. This is especially true when it comes to matters that have not yet been clarified in court through litigation or to topics that only a few people really know anything about - art, for example.

Cyber thefts and losses are expected to amount to 1.3 billion USD this year in the art sector alone. That is roughly equivalent to the worldwide premium volume for art insurance in general. And these losses are not insured because art insurers rightly feel overwhelmed by the loss events and cyber insurers have fortunately not yet discovered the market for themselves. However, the art world itself has only a very low level of risk awareness: five years ago, we already tried to create problem awareness in the industry - but what could happen to you when your data is in the cloud? You can hear about this at the next practice day of the Federal Association of German Galleries on 26 September in Cologne.

France also uses its cultural strengths to promote economic cooperation - for example, the Louvre came to Abu Dhabi. The former director of the Louvre, Jean-Luc Martinez, also seems to have benefited personally from this. The prosecution authorities are now very interested in him, one reads at Artnet, among others.

Art Basel Hong Kong took place and 50% of the booths were without staff on site. Is this the fair concept of the future? Or does something like this only work in totalitarian states that also influence the interpretation of works of art, if they are allowed to be shown at all.

After the theatre in Mariupol, Russia has now also bombed the cultural hall in Kharkiv. Surely this is another weapons depot that is hindering the Russian advance. And on the horizon, the image of the ugly German appears again, this time embodied by a small Social Democrat, whom the burden of his office presses even further to the ground and who, out of sheer respect (fear would perhaps be the more honest word and explain the bad counsellor) for Russian nuclear weapons, would rather watch eastern Ukraine being crushed by the boa constrictor than let the weapons be delivered, on which the Bundestag has decided. Let's be clear about this: I don't want war either - but the chance that freedom and justice of a free country can be defended and in the end the aggressor is held responsible in a proper court of law.

I wish you all a successful week in which art is not neglected.

Stephan Zilkens and the team of Zilkens Fine Art Insurance Broker GmbH in Solothurn and Cologne

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