"The Art of Collecting" podcast - Episode #6: The art of protecting
Laurent Issaurat: Hello, my name is Laurent Issaurat, Head of Art Banking services at Societe Generale Private Banking. I am very pleased to welcome you to our podcast series “The Art of Collecting” that explores key-topics relating to the ownership and management of art and collectibles. Today we will focus on the financial protection of these assets through insurance solutions. I’m very pleased to welcome Rémi Béguin, Chairman of Patrim One, an international brokerage company that specialises in insurance solutions for high and ultra-high net worth individuals. Hello Rémi, welcome!
Rémi Béguin: Hello Laurent, thank you for receiving me.
Laurent Issaurat: My pleasure! I would like to start with a very basic question: what sort of assets does the word “collectibles” stand for?
Rémi Béguin: That’s a term that everyone defines differently. For me, it covers all “items” that can be assigned a value and, and given what they represent, insured to limit or prevent any losses in the event of their partial or complete destruction. It can be interpreted broadly and applied to more than just artworks like paintings or sculptures. It should encompass all extraordinary assets that can constitute someone's property, such as wine, vintage cars, period furniture, jewellery sets, collectible clocks, luxury leather goods and haute couture clothing. In some cases it may refer to items grouped into real “collections”. And in others it may just refer to one or more items that individually are valued highly enough to warrant financial protection.
Laurent Issaurat: Thank you very much Rémi for this very broad definition of collectibles. Based on your experience, how would you rate people’s average insurance coverage; are collectors, generally speaking, adequately insured?
Rémi Béguin: As strange as it may seem, and while trying not to paint with too broad a brush, that depends entirely on where they live and how the local culture approaches risk management. For example, people from countries like such as Spain, Italy and France have a much more fatalistic approach, and often don't take action until after a loss is incurred. Meanwhile, people from English-speaking countries make more of an effort to control life’s ups and downs. A collector's prejudices can also lead to them being under-insured(1) or having no insurance at all. Some believe their coverage is good but haven’t analysed the restrictions on their contracts. Others think that getting the right coverage will be complicated due to the protective and preventative measures required, which could be onerous, and that, in addition to having to provide information on the assets, getting them valued can be difficult. This kind of faulty reasoning is why too many collections in France have very poor coverage. And unfortunately people only realize the truth once something bad happens.
Laurent Issaurat: Thank you very much Rémi, that is quite fascinating to hear, all these cultural differences, when it comes to insuring, insurance of one’s assets. What risks should be covered through a robust insurance policy, in your mind?
Rémi Béguin: The idea is to have a contract with a very broad scope of application. The best solution would be to get coverage that protects against all risks, not just identified risks such as fire, extreme weather, water damage, theft or vandalism. Wording that covers everything that isn’t specifically excluded will help collectors deal with the unexpected by offering a contract with a much broader scope of application.
Laurent Issaurat: Excellent. When people talk about art, they automatically think of the risk of theft. Is that the main risk?
Rémi Béguin: No. The biggest risk is fire, given that fires can occur even in very well-maintained spaces. Negligence or short circuits in environments with an ever-growing number of electrical devices could be the cause, or the fire could spread from a neighbour's property. Water damage is also something to consider before worrying about theft. It's another major risk, especially if you live in an apartment. Theft is more of a risk for certain types of works, such as bronzes, watches, jewellery, and haute couture clothing. Since it is associated with vandalism, it cannot reasonably be dismissed. In closing, I'd like to add that, for sculptures, breakage may be the main risk depending on the material used.
Laurent Issaurat: This is very clear, thank you very much again Rémi. Do all insurance companies offer similar solutions? Or can it be said that there are some real leaders who stand out in your sector?
Rémi Béguin: No, Laurent this is a niche market, so not all insurance companies are interested. Only a few companies have been active in the market for many years, and have very clear positions, great ambition and a well-defined identity in this field.
Laurent Issaurat: Based on your professional experience, that you filled over the years, what advice do you have for people who want to protect their assets? What would be the first steps and the right questions one should ask?
Rémi Béguin: Probably the first step, I use to say, is talk to a specialist broker that will be there to support collectors at every stage of the process. First, they’ll help define how much coverage is needed, then set up a tailored solution for the declared or agreed value(2), which takes all of the collection’s unique characteristics into account. The insurance consultant identifies the risks related to the collection, analyses them and then manages them with a customised contract. If any damage occurs, the insurance consultant will also know how to get appropriate compensation and will work with experts to provide good advice on protecting and restoring items or even study appropriate prevention and protection solutions.
Laurent Issaurat: Thank you, Rémi. In practice, items and collectibles can be located in different properties, sometimes that are spread in different countries, or can even travel from one point to another, for instance when they are lent to a museum… Does one need to contract several insurance products to cover these different types of risks?
Rémi Béguin: Effectively insuring any valuable object that will be transported from one place to another is a must. In fact, moving the piece entails the risk of damage due to being handled, whether removing the piece from its initial position, transporting it, or setting it up at its destination. Worldwide coverage that considers all situations can be applied so that no guarantees are broken. Guarantees will play a role during the stages of transport, storage, loan for an exhibit or even restoration. Items could therefore be guaranteed at different addresses as soon as coverage levels are uniform. Once again, that's the reason people need a specific contract that takes all requirements into account.
Laurent Issaurat: Thank you again Rémi. Coming back to practical considerations, collections tend to change over time. Some assets may be sold, others may be acquired, on an on-going basis. Is this something that insurance policies can really deal with?
Rémi Béguin: Yes, of course. New acquisitions can be automatically included in existing coverage with a set time frame for settling the situation. The valuations of insured objects must also be regularly updated to include changes in the markets. To do so, we call upon recognized experts. These updates are important for a collection’s overall administration, but also from the perspective of insurance. They are necessary to get the best compensation if an event arises.
Laurent Issaurat: Dear Rémi, I would like to thank you warm-heartedly for your so valuable and so clear insights to the art of insuring collectibles. Dear listeners, I would like to thank you as well for your attention. I’ll see you next time for our last episode in this series, which covers the next step in the life of an artwork or collectible: transfers and donations. I hope you have found this podcast instructive and useful. Our series “The Art of Collecting Art” is available on Apple Podcasts and Spotify via our programme “#PrivateTalk by Société Générale Private Banking”.
(1) poorly set up insurance that doesn’t effectively protect against the risks incurred.
(2) value for each insured object as previously determined by agreement between the insured and the insurer.
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