Ironshore Creates Cover for Fine Arts Seizure

PRODUCT: Fine arts confiscation coverage

COMPANY: Ironshore’s Pembroke Managing Agency Limited, Lloyd’s Syndicate 4000

BEST RATING: Pembroke Syndicate 4000 operates within Lloyd’s, where the rating is A (Excellent).

AVAILABILITY: Coverage is available on an open-brokerage basis.

FOCUS: When government entities treat works of art as political, museums and art exhibitors could face confiscation or restriction of those works.

For example, earlier this year, the British government denied export licenses for a white silk robe and dagger once owned by World War I British diplomat Lawrence of Arabia—declaring the artifacts too essential to British history to be removed from the country, according to the BBC.

Situations where governments limit movement of fine arts across country borders inspired Ironshore’s new fine arts confiscation coverage, designed to address confiscation risks affecting museums that exhibit art works and valuable coins (also known as “specie”) borrowed from owners in other countries.

The product combines expertise from the political risk and fine arts teams at Ironshore. “Increasingly, works of art are being loaned to museums in emerging markets,” says Charles Mackay, head of political risk, Ironshore International. The new product “responds to our clients’ concerns about the possible seizure of their work, giving them assurance that it will be protected whilst it is on loan.”

The policy protects against loss due to confiscation and seizure by a state-owned entity while fine arts holdings are on loan to, on display or housed at art institutions. Coverage kicks in if government action restricts the artwork or other valuable from “re-export,” such as crossing a country border.

The contracts that govern the lending of works of art for exhibitions around the globe have gone from “very simple and very much standardized to being more complex, looking at a broader spread of issues,” Mackay says. Economic growth around the world has created “greater demand for these exhibitions to go to more unusual territories,” he adds.

Thus, art owners—who typically require a borrowing institution to insure all risks—are calling for protection against political risk, according to Ironshore. Political risk and government seizure are now “perils to be insured” that wouldn’t ordinarily be covered in a typical fine arts policy, Mackay explains. Ironshore asserts it is first to offer such coverage.

UNDERWRITING: Coverage is underwritten as a standalone policy or as an add-on endorsement to an Ironshore program for fine arts and specie for museums, galleries, exhibitions, corporate and private collections and auction houses. While the policy has no monetary deductible, waiting periods apply for some perils—for example, 180 days for coverage for the inability to re-export a work of art.

Ironshore’s capacity is $60 million on any one risk in the U.S. Policy periods tend to be fairly short, but the firm can cover periods up to five years. A key exclusion under the policy is coverage for defective title for a work of art, so the policy does not insure disputes about artwork ownership.

MINIMUM PREMIUM: None.

TARGET: Museums, universities and fine arts exhibitors exposed to political risk in regions of the world due to economic and political uncertainty or differences in cultural, historical and religious views.

COVERAGE TERRITORY: The product is available worldwide on a surplus lines basis through Ironshore-owned managing general agents.

CONTACT: Charles MacKay, director; Pembroke Managing Agency Limited, 8 Fenchurch Place, London; 44-0-207-337-4400.

Ronimarie Acord is an IA contributor.