SINGAPORE – The insurance market for art and collectibles has seen strong growth recently and it looks set to scale even higher in line with the booming market for such expensive rare items here.
Market experts expect art sales to continue with its stellar performance in the months ahead on the back of the improving economy and rising appreciation for art pieces here.
Singapore’s position as a wealth management centre, which may attract more high net worth individuals looking for alternative investments, is another factor that may boost sales of expensive art and collectibles here.
One major player that has benefitted from the rising opportunities in this niche sector is AXA Art Insurance, a dedicated art insurance arm of European insurance giant AXA.
The company told MediaCorp that its total premiums here have risen over 75 per cent from January to July, compared to the same period last year.
AXA Art Insurance Singapore spokesperson Mr Charles Liu also said that the company’s sterling achievement in Singapore has outpaced its performance in the European market over the same period.
Mr Liu added that he foresees total premium earnings from art insurance alone to hit over $1 million this year.
“Firstly, Singapore is not as badly affected by the financial crisis as compared to Europe. Secondly, art insurance is still very new in Singapore and there is a market demand,” said Mr Liu.
Meanwhile, leading auction house Christie’s said that its Singaporean clients have spent a total of HK$54.6 million ($9.5 million) during its Hong Kong 2010 spring auctions. This is a whopping 169-per-cent increase from the same period last year.
It added that its Singapore clients have increased their spending across the different categories such as jewellery, watches, Asian contemporary art and Chinese 20th Century art, as well as South-east Asian modern and contemporary art.
Specialised insurance for art or collectibles typically covers the item from the purchase date, including when it is transiting or is displayed in the house. It helps with restoration fees if the piece is damaged. However, it usually does not compensate for the loss of investment value.
The insurer will examine and conduct an annual valuation of items based on their quality, artists’ prominence and existing market demand.
They will also assess the storage conditions regularly. For example, AXA Art does not cover gradual deterioration due to weather conditions. However, it covers external and accidental loss – such as those caused by flooding – on a case-by-case basis.
Market players said that the biggest challenge in the industry now is the lack of skilled professionals.
“It is difficult to find someone with art expertise to evaluate art pieces and the business acumen to grow the company,” said Mr Liu, who was trained as an artist in China.
Apart from AXA, other market players include United Overseas Insurance which offers The United Fine Art Insurance Policy to selected clients.
However, Christie’s said that its insurance arm focuses its services mainly in Europe and provides coverage for items sold from its auctions for up to seven days or till they are collected.
Some gallery owners and collectors have turned to their existing home insurance policies to provide protection for their collections.
However, experts said such extension or option may limit the amount insured and can be invalid once the item leaves the house.