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Art and specie

Published on 13 January 2021

In this chapter of our Annual Insurance Review 2021, we look at the main developments in 2020 and expected issues in 2021 for art and specie.

Key developments in 2020

The COVID-19 pandemic has had an unprecedented impact on the art market.  Auctions and art fairs moved online and galleries closed their doors for a substantial portion of 2020, with mixed success.  Sothebys doubled the average value of items sold in online sales and many galleries reported that they had reached a new generation of buyers.  However, there were signs that buyers were not prepared to purchase "big ticket" pieces without seeing them in the flesh. 

Art was certainly more stationary in 2020, which may have reduced claims for the loss and damage of works in transportation.  Looking ahead, buyers are more likely to have relied on information provided to them when purchasing a piece as opposed to their own inspection.  An increase in claims on professional indemnity policies can perhaps be expected as buyers reassess the prudence of their acquisitions in 2020. 

What is clear is that the pandemic led to a flurry of claims under business interruption policies, with a class action being launched against insurers on behalf of more than fifty art galleries, museums and sole traders. Museums and galleries forced to close welcomed the outcome of the FCA's test case on business interruption cover in September. Although no art-specific clauses were considered in that case, the court decided that some of the policy wording it reviewed provided coverage if, for example, businesses could not be accessed as a result of government order. At the time of writing, the decision remains subject to appeal, and each policy should be considered on its own terms.

What to look out for in 2021

Technology is being used in increasingly ingenious ways to both create and test the authenticity of art.

Art created by artificial intelligence is a growing area of the market. A new breed of artists is using "generative adversarial networks" to produce original artworks. The software is first trained using a wide range of existing works and then produces its own works until it cannot distinguish between the two.  The art produced is surreal, abstract and yet strangely familiar. It also crosses genres: Christies has auctioned an 18th century style portrait produced by AI; more recently a software called GANsky has created street art murals. 

Technology can also be used to detect fakes and forgeries. Software is taught to recognise an artist's work, and then from as little as a single photograph indicates whether the piece is genuine. With some experts estimating that around 20% of artwork in major galleries is fake, this technology is likely to play an increasing role in resolving questions of attribution.

The use of technology in the creation of art has the potential to raise complex intellectual property issues, both in respect of the technology itself and its product. Whilst technology develops, its status alongside more traditional attribution methods is unclear, potentially increasing the scope for claims against professionals. 

Authored by Emma West.

Download our full Annual Insurance Review 2021 for more insights.