State of the Insurance Market:
2025 Outlook

Fine Art

Overall art market sales are down, most notably in the auction segment. Two factors leading to this decrease in sales are the interest rate environment and geopolitical uncertainty, among others. In addition, the great wealth transfer plays a role — younger generations inheriting artwork are not as interested in caring for or amassing mega collections.

Through this transition, more artwork is for sale, but a shift to catering to the next generation will continue, especially in luxury retail. After some speculation about waning sales at art fairs, the first reports from Frieze LA are positive, although sales reports from more recent art fairs are not as positive. Dealers report it takes more time to make sales, resulting in more inventory. Dealers need to prioritize proper valuation for owned and consigned artworks to ensure adequate coverage. Galleries are encouraged to review their limits and lists of covered art fairs and locations, especially for temporary locations.

Museums continue to mount high-valued shows, while some federally funded institutions are experiencing significant funding cuts; given the current political climate, this trend is likely to continue. In addition, museums face aging infrastructure concerns exacerbated by climate change.

Market Conditions

 

Despite the devastating losses due to wildfires in Los Angeles, the fine art insurance segment remains appealing and profitable for insurance companies. Capacity and carriers continue to enter the fine art market segment, resulting in competitive rates for clients with few to no losses and located in non-catastrophic (CAT) locations. With multiple insurance companies eager to deploy their capacity, highly desirable accounts can take advantage of this competitive climate. Those in CAT locations will experience significant insurance coverage challenges, more rigorous underwriting, higher deductibles, and increased rates. Clients with little to no risk mitigation techniques or with a difficult claim history will find it hard to attain comprehensive coverage and may not be able to secure coverage for susceptible perils such as wildfire, water damage, or loss caused by shipments not with a professional fine art packer/shipper. Underwriters are evaluating emerging climate change-associated risks. Coverage in CAT areas is exacerbated by the continued, rapid increase in art values, especially in California and Florida, where earthquake and windstorm aggregations are already nearing a tipping point.

Specific concerns for the fine art industry in 2025 include:

  • When collections outgrow primary homes, main museum buildings, and gallery locations, much of the overflow artwork is stored. Fine art warehouse facilities continue to face aggregation issues, especially in major art-centric geographies. Skyrocketing art values are impacting newer locales, such as Aspen, where the ultra-wealthy house some of their large collections. It will be critical for clients to consult with their broker on warehouses vetted by insurers that are less susceptible to weather-related losses.
  • The focus on which art fairs are in demand with dealers and collectors continues to shift. Dealers are examining which fairs yield the best results.
  • Museums need to seek specialist advice on how climate change will affect them. It is essential for museums to prepare for the future and ensure their collection and incoming and outgoing loans are protected.
  • When planning outgoing loans, consider how the geopolitical environment could affect the destination facility.

Cyber events continue to occur in the art world. The interconnectedness of the art world becomes more apparent after a major cyber incident. Between the Gallery Systems cyberattack, Christie’s hack, and recent Microsoft/Crowdstrike outage, the art world is becoming more aware of how cyber incidents can compromise sensitive information and affect their ability to do business.
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Coverage Considerations

 

Underwriters require more information than ever to issue quotes. They are tightening requirements after paying significant claims on large private collections, shipping losses, express carrier claims, and incidents involving self-storage locations.

Appraisals for higher-valued items are a coverage requirement, as are full shipping details.

As the art world seeks ways to improve its environmental impact, some look to alternative shipping methods via ocean freight. Almost all forms of art are at greater risk of loss or damage when shipped by ocean freight due to a lack of climate control and transport delays caused by port congestion.

Fine Art Rate Forecast

 
Rate Forecast
Fine Art   Flat to +3%
Fine Art: High Risk +15% to +20%

Recommendations

 
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Stay on top of art values: It is critical to understand the sum of values at each insured location. Most collections need to be reappraised every three to five years. To have the broadest collection coverage, underwriters will ask clients to commit to this schedule.

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Prepare granular underwriting information: This includes fire and burglary protection, as well as retrofitting, relative to all locations.

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Ensure protection from CAT risk: Consider reallocating some higher-valued works to non-CAT locations or hiring a consultant who can advise on loss mitigation practices. Disaster response and evacuation plans will be critical for those in CAT zones.

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Gather all relevant shipping details: Drill down on first- and last-mile shipment details and be prepared to relay these details to a broker/insurance company. The most common cause for claims is transit. As a result, underwriters expect specific shipping companies and details surrounding the artworks and travel arrangements.

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Provide notice: Give a broker plenty of notice prior to switching or moving into a new fine art warehouse to get the best possible coverage.

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Consider political violence/full terrorism coverage: When lending or consigning artworks or attending fairs in countries experiencing political unrest, diligence is crucial.

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Procure cyber insurance: All art world businesses and institutions need cyber insurance. Not only would a cyberattack affect the ability to work but revealing sensitive client and donor information through an attack could cause significant reputational harm.

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.