Fine Arts Coverage Is Still a Pretty Picture.

Record prices for fine art sold at auctions are fueling growth in the market for fine-arts insurance coverage. But with rates low, as in other segments of the property/casualty industry, art insurers are taking measures to reduce losses.

The art insurance market's big challenges lie in transportation and how well customers maintain their art objects, said Dietrich Von Frank, president and chief executive officer of Axa Nordstern Art Insurance Corp.

Recently, the Insurance Services Office Inc. and the Art Loss Register, the world's largest private computerized database of stolen art works, have joined forces to combat art theft. Searches prompted by requests from art dealers and museums have doubled in the past two years, reflecting growing demand for due diligence among buyers and sellers of art.

ISO will forward information to the Art Loss Register on claims for lost or stolen works of art, antiques and other valuables from its ISO ClaimSearch system of 140 million records of property, liability and auto claims filed with insurers. Created in 1991, the Art Loss Register, based in London and New York, has a database of 100,000 unique and rare stolen valuables, including paintings, sculptures and baseball cards.

DeWitt Stern Group, an insurance broker in New York, has been insuring fine art for 100 years and covers commercial and personal fine arts. "Right now rates have been getting lower," said Catherine Torsney, manager of fine arts. DeWitt uses Zurich Insurance Group, Ace Ltd. and Fireman's Fund for commercial coverage and Chubb Insurance Group, Fireman's Fund and the Atlantic Mutual Cos. for personal coverage.

"The fine-art insurance business is absolutely growing" Torsney said. "There are a lot more collectors and new records are being set at auction houses for artwork." Collectors are gobbling up Van Goghs, Renoirs and Picassos at famous auction houses like Sotheby's. A Van Gogh painting, Self-Portrait (Without Beard), was sold at auction in Novembery 1998 for $71.5 million, triple the expected price.

Von Frank says the size of the market is hard to quantify, in part because large collectors, like museums, insure only 5% to 10% of their holdings. "The best guess is the market writes $300 million to $400 million in gross premiums annually," he said. Currently 40% of Axa Nordstem's business is commercial and 60% personal.