insurance, non insurance and state indemnity
TRANSCRIPT
Insurance, Non Insurance, Non Insurance/shared liability &Insurance/shared liability &
State IndemnityState Indemnity
Collection Mobility 2.0 Collection Mobility 2.0
Madrid, 31 May – 1 June 2010 Madrid, 31 May – 1 June 2010
Hans BuurmanHans Buurman
Deputy Director Gemeentemuseum Deputy Director Gemeentemuseum The Hague The Hague
Flabbergasted….Flabbergasted….Object 1.Object 1. Object 2.Object 2. Object 3.Object 3. Object 4.Object 4. Object 5.Object 5.
CuratorCurator € € 350,000350,000 € € 1,000,0001,000,000 € € 2,200,0002,200,000 € € 200,000200,000 € € 12,000,00012,000,000
Auctioneer Auctioneer A.A.
€ € 50,00050,000 € € 500,000500,000 € € 800,000800,000 € € 200,000200,000 € € 25,00000025,000000
Auctioneer Auctioneer B.B.
€ € 500,000500,000 € € 500,000500,000 € € 700,000700,000 € € 1,000,0001,000,000 € € 15,000,00015,000,000
Value of ObjectsValue of Objects
the differences in valuation are a the differences in valuation are a cause of concerncause of concern
the determination of value is the determination of value is subjectivesubjective
Gemeentemuseum The Gemeentemuseum The HagueHague
Top Collection: 400,000 visitors a year Top Collection: 400,000 visitors a year € 425,000 insurance premium in 2009€ 425,000 insurance premium in 2009
Non InsuranceNon Insurance
A short term consensus result, at non A short term consensus result, at non insurance in case of total loss or theft, insurance in case of total loss or theft, is unrealisticis unrealistic
Necessary to concentrate on other Necessary to concentrate on other methods of reducing insurance methods of reducing insurance premiums, based on shared liability premiums, based on shared liability or own cleverness. or own cleverness.
Possibilities to reduce costs Possibilities to reduce costs of insurance premiumsof insurance premiums
Stop insuring depreciationStop insuring depreciation Stop insuring the risk against terrorism and Stop insuring the risk against terrorism and
war war Stop evaluating the object as high as possibleStop evaluating the object as high as possible Put out to tender at top collection exhibitions Put out to tender at top collection exhibitions If the borrower pays for insurance, let it If the borrower pays for insurance, let it
happens against normal, financial conditions, happens against normal, financial conditions, not against immense profitnot against immense profit
Are there more possibilities in saving insuring Are there more possibilities in saving insuring premiums ??? premiums ???
Introduce a European-wide state indemnity Introduce a European-wide state indemnity scheme based on a standard cover scheme based on a standard cover
Content of Insurance Content of Insurance CoversCovers
DAMAGE DEPRECIATION
TOTAL LOSS
THEFT
TRANSPORT
35% Incl. TERRORISM
25%
STAY 35% Incl. TERRORISM
25%
TRANSPO
RT RETURN
35% Incl. TERRORISM
25%
Insuring depreciation Insuring depreciation
object is unique; it is impossible to object is unique; it is impossible to replace this objectreplace this object
after restoration, the object is in the after restoration, the object is in the best possible condition best possible condition
there is no reason to suppose that a there is no reason to suppose that a restored object has a less artistic or restored object has a less artistic or cultural valuecultural value
the premium will decrease 35% the premium will decrease 35%
Stop insuring depreciationStop insuring depreciation
Insuring against Terrorism Insuring against Terrorism and Warand War
The premium of covering against The premium of covering against terrorism and war adds up to 40% of terrorism and war adds up to 40% of the total premium.the total premium.
The chances of terrorism and war are The chances of terrorism and war are minimal (war doesn’t come overnight)minimal (war doesn’t come overnight)
As long as this part of the premium is As long as this part of the premium is sky-high, don’t insure this risksky-high, don’t insure this risk
insuring against the risk of insuring against the risk of Terrorism and War is not necessaryTerrorism and War is not necessary
Insurance PremiumInsurance Premium Value of the objectValue of the object Permillage per euro Permillage per euro
For example insurance cover For example insurance cover Gemeentemuseum The Hague, object valued at Gemeentemuseum The Hague, object valued at € 20,000,000 originated from a European € 20,000,000 originated from a European museum, exhibition stays 3 month:museum, exhibition stays 3 month:
TransportTransport : 2 x 0.15 o/oo x € 20,000,000 = € : 2 x 0.15 o/oo x € 20,000,000 = € 6,000 6,000 StayStay : 3 x 0.075 o/oo x € 20,000,000 = € : 3 x 0.075 o/oo x € 20,000,000 = € 4,5004,500
The value of objectsThe value of objects
I would be preferable to evaluate I would be preferable to evaluate objects as low as possible and not as objects as low as possible and not as high as possible.high as possible.
.. Nude Green Leaves, and Blust : Nude Green Leaves, and Blust : PicassoPicasso€ € 81,000,00081,000,000
Reaction of a curator: Reaction of a curator: “our” Picasso “our” Picasso has more quality, the market price is has more quality, the market price is higher than it was last week, also the higher than it was last week, also the new value is going up with € new value is going up with € 20,000,000 .20,000,000 .
Invite more brokers to Invite more brokers to tendertender
This produces substantial differences in premiums This produces substantial differences in premiums
Example:Total value of the exhibition € Example:Total value of the exhibition € 500,000,000500,000,000
Dutch indemnityDutch indemnity
Broker a. € 145,000Broker a. € 145,000
Broker b. Broker b. € 125,000 € 125,000
Broker c.Broker c. € 160,000€ 160,000
The borrower pays always The borrower pays always the bill, but this can be in a the bill, but this can be in a
different waydifferent way It concerns a paintingIt concerns a painting The value is € 20,000,000The value is € 20,000,000 From a European museumFrom a European museum The exhibition lasts three monthsThe exhibition lasts three months
Borrower’s broker: € 10,500Borrower’s broker: € 10,500(2 x 0.15 o/oo + 3 x 0.075 0/00) x € (2 x 0.15 o/oo + 3 x 0.075 0/00) x €
20,000,00020,000,000
Lender’s broker: € 17,600Lender’s broker: € 17,600(2 x 0.2 o/oo + 3 x 0.16 0/00) x € 20,000,000(2 x 0.2 o/oo + 3 x 0.16 0/00) x € 20,000,000
Borrower vs. lenderBorrower vs. lender
The leading principle for insurance would The leading principle for insurance would be: be:
Best quality of the insurance cover vs. the Best quality of the insurance cover vs. the best price for the borrower best price for the borrower
The lender is responsible for the content of The lender is responsible for the content of the insurance coverthe insurance cover
The borrower is responsible for the The borrower is responsible for the contract with the broker; no “profitable” contract with the broker; no “profitable” influencesinfluences
Special Insurance cover for outgoing loans
Gemeentemuseum’s special cover for outgoing loans
A special cover with our broker Same conditions for outgoing and
incoming loans The borrower of our objects has to pay
the very lowest price for this insurance (without profitable permillages)
No discussion about the insurance cover
More possibilities to save insurance premiums
What will be the reason to insure the whole value of an exhibition during transport; are all the object at the same time “on the road” ??
Is it necessary to insure the whole value of the exhibition ??
State IndemnityState Indemnity State indemnity helps to reduce insurance State indemnity helps to reduce insurance
costs substantiallycosts substantially Differences in coverages make it difficult for Differences in coverages make it difficult for
lenders to accept the state indemnity of all the lenders to accept the state indemnity of all the different countriesdifferent countries
It would be helpful if:It would be helpful if: There would be only one state indemnity scheme in There would be only one state indemnity scheme in
EuropeEurope The museums develope a fixed cover for this The museums develope a fixed cover for this
indemnityindemnity The State indemnity covers the whole value of the The State indemnity covers the whole value of the
exhibition. exhibition.
ConclusionsConclusions
Museums in Europe can reduce insurance Museums in Europe can reduce insurance costs costs
They don’t need direct help from others They don’t need direct help from others
But: museum management at both sides But: museum management at both sides (lender and borrower) would have to do (lender and borrower) would have to do this with a collective policy; shared liability.this with a collective policy; shared liability.
Let us aim to reduce insurance costs! Let us aim to reduce insurance costs!