Insurance, non insurance and state indemnity

1,183 views

Published on

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,183
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
6
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Insurance, non insurance and state indemnity

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

×