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The past two years of COVID-19 has deeply affected the fine art industry. Workers were furloughed and the uptick in general supply chain issues disrupted fine arts sales and transport. Even as the pandemic’s effects continue in 2022, those involved in the art world should be aware of global and societal shifts affecting the industry and be prepared to manage risks and exposures in a new landscape.
Climate Change and Necessary Precautions
From flash floods to uncontrollable fires, weather events are permanently changing how we live and work. The world of fine art is no exception. Disaster plans, for instance, are now a must for galleries, private collections and museums in areas prone to severe weather events. Arts organizations and collectors in these locations along coastal areas subjected to flooding and wind, like New Orleans, have long struggled to secure property insurance. They must be proactive in mitigating risk and should work closely with specialist brokers to review available coverage commercially and personally. Those in California or other wildfire zones need to develop ways to fireproof collections, finding effective solutions that go beyond risky fireproof safes or rapid evacuation of works when facing a climate event.
Not everyone wants to be told what to do or how to do it, and situations are made worse when insurance companies non-renewing fine art policies are on the rise in natural catastrophe (CAT) zones. As a specialist broker, Risk Strategies can provide insights on practical protection and risk management strategies, but in real world situations, those working within the space must also take extra care to assess their geographical risk and predict how evolving weather events might affect them.
Retirement in Artist-Endowed Foundation Spaces
Artist-endowed foundations are created to honor the legacy of the world’s greatest artists by managing ownership of their body of work and property and furthering public benefit through charity and education. More often than not, however, studio managers for artist foundations are near the same age as the artists they serve. As they near retirement age, the question of foundation succession is becoming a significant and challenging predicament, especially if the artist passes on before the manager.
Any next-in-line will need institutional knowledge about an artist’s work. There is an enormous responsibility for both the artist and succeeding manager to mutually understand what can be considered an essential part of the artist’s canonical legacy and what should never be seen by the public, like sketches or outtakes for video work. Having artists begin the process of establishing this legacy as early as possible is an important step in making the managerial transition a smooth one.
The introduction of non-fungible tokens (NFTs) in the art world has created a precarious situation for collectors and insurers due to the medium’s mostly unestablished creators, inexperienced art collectors, relative intangibility, and associated, emerging underwriting challenges. While collectors are able to secure insurance coverage for physical works by established artists, NFTs make things much more complicated.
The NFT space in fine art is still complex and evolving. Collectors new to the industry are more or less susceptible to theft by storing NFTs incorrectly. Underwriters are willing to find NFT solutions for those with quality long-standing reputations in fine art, but less credible collectors coming into the space are going to encounter many obstacles.
Fine Art Through 2022
We are in a unique and challenging time for fine art. As the year progresses and new challenges emerge, we plan to do deeper dives on key issues, providing thorough analysis and recommendations.
We encourage you to follow along to better understand how the business is changing, and what those in the industry can do to prepare for – and overcome – looming obstacles.
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