New Delhi: Girish K. Chopra, an insurance broker, has witnessed the craze with which Indians are protecting their assets: cars, houses, factories. But lately, his clients are beginning to insure another precious investment: art.
As valuations for some works surge into crores, insurers are rolling out new ways with which collectors can protect paintings and, to a lesser extent, sculptures.
There is little data in the nascent art insurance market, but Chopra estimates a growth of 20-30% over the last three years, on the heels of the deregulation of the Rs20,000 crore insurance sector seven years ago.
“Because of its perceived value, there is a lot of interest in insuring art,” says Chopra, who heads Sonnen Insurance Broking Services Pvt. Ltd, a New Delhi-based firm that functions as an insurance intermediary.
Insurers across the country have begun introducing programmes to insure art works. Bajaj Allianz Insurance Company was one of the early players and introduced art insurance five years ago. Alpana Singh, a senior manager at the company, says business is growing at a brisk 30-40%.
The challenge, insurers say, is convincing customers that they should view the works hanging in their homes as valuable—or in some cases, more valuable—than the homes themselves. The other hurdle is assessing the value of some works—and agreeing on that number.
Long time collector Bijay Anand plans to start insuring some of his art soon. “If you lose them in accident, it’s a tragedy because a lot of good art will be lost forever,” says Anand, who lives in Mumbai. “But by insuring, you can at least get the money back.”
Demand generally comes from individual clients and galleries; typically insurance is filed in the event of theft, fire and damage in transit. “But arriving at a valuation is always hard,” said Radhe Shyam Sharma, divisional manager, Oriental Insurance.
That’s where companies such as Sonnen come in, matching up clients, insurers and art evaluators. Sonnen’s Chopra charges a flat 10% commission after a deal is sealed. Sonnen generally works with the three major insurers—Bajaj Allianz, ICICI Lombard and Oriental Insurance—with coverage valued at Rs100 crore. Chopra would not disclose premiums, saying they are wide-ranging.
To place values on the work, Sonnen has appointed consultants, such as Siddhartha Tagore for Bengal and pre-independence art, and Prima Kurien for progressive artists such as M.F. Husain, Syed Haider Raza, Francis Newton Souza and Ram Kumar.
Kurien, former owner of the Art Inc. gallery in New Delhi’s Shahpur Jat village, has put modern-day price tags on dozens and dozens of good and bad works. Last month, she valued four works, including one by Souza, at Rs2 crore. But fresh from spotting a phoney Husain recently, she says the rising number of fakes in the market is alarming.
The fakes often make the process of valuation even more arduous. “While insurance value is based on the current market value, gallery and studio rates, fakes pose a problem always,” says Kurien.
But Neville Tuli, chairman of Osian’s Connoisseurs of Art, thinks that as the valuation process becomes transparent, art insurance will become more popular—and necessary.
“Insurance provides a sense of security and establishes financial value of objects that cannot be easily valued,” he says. “It’s an important step in the evolution of the artmarket.” In October 2005, Osian’s hired ICICI Lombard to begin the process of insuring its 200,000 art collection. Last year, it also insured all the works it bought for the Osian’s Art Fund, which represents investments of Rs100 crore .
With the number of cross-country exhibitions taking place, insurers also see galleries coming forward to safeguard works against travelling risks. Yet in the highly unregulated art market, Gupta says his task is not easy. “Art is still not considered a seriousportfolio,” he says.
Appreciating art expenses are sending collectors rushing to find out their worth. Ashish Anand, who runs Delhi Art Gallery in New Delhi and occasionally assists Sonen as a valuator, offers free advice to collectors who walk in with requests. “But now with so many people dropping by every week,” he says, “I am thinking of charging them soon.”