Fine works of art tend to be unique, sometimes difficult to authenticate and hard to value. But new ways of unlocking and gathering data and evolving technologies to help identify work are helping to make the insurance process more efficient and should enable insurers to gain deeper risk management insights than ever before, Chris Bentley, Head of Fine Art & Specie, UK & Lloyd’s, explains.
Data is one of the most valuable tools available to insurers in the underwriting process. It can unlock insights into trends and patterns and enable us to better understand, assess and price risk.
When it comes to insuring fine art, however, the data that we have at our disposal is often unstructured, compared with the more structured data sets often available in other classes of insurance.
This is due, in part, to the fact that artworks tend to be unique and obtaining reliable, accurate, objectively recorded data about them can be a challenge. Authenticity information, for example, is often difficult to access, and at best relies on lengthy and potentially unreliable paper trails. While expert opinion and scientific techniques can be used to help validate authenticity, this does not always produce black and white results and is almost inevitably costly.
There are also challenges around establishing and proving legal matters such as title for certain works, which also can make selling, buying, borrowing or lending a piece more difficult and expensive to transact. Added to that, the valuation data available for the art market is always partially obscured, as there is still no real data available publicly where art is bought and sold privately, for example, rather than at auction, where typically prices are public.
I recently took part in a panel discussion at The Art Market 2050 event on the topic of “The art of data; Unlocking potential in the digital marketplace,” during which some of these challenges – and potential technological solutions to them – were discussed.
Digital fingerprints, qualitative data
My fellow panellists at the event gave some interesting insights into some of the technological advancements being made to try to derive better data in the art market.
In order to value artworks without over-reliance on the subjective opinions of connoisseurs, experts are findings ways to obtain qualitative data that can supplement the publicly available information from auction houses. This includes, for example, survey data about how people view – and therefore to some extent ascribe value to – a particular artist’s work, or particular types of art.
This information can be accompanied by additional information about which art school an artist attended, and so on, to build up a clearer picture of the factors and trends that might affect the value, or possible future value, of a piece.
Additionally the use of digital fingerprint technology, which can be used to irrevocably link a physical artwork with verified information about it, is a potentially powerful development, allowing provenance research, proof of legal title and authenticity data to be coupled with the physical work in perpetuity and thus avoid the need for such work to be repeated the next time that due diligence is needed for e.g. the sale of that work.
Harnessing technology
Fine art insurers are keen to unlock the power of this developing technology and more accurate and complete data will improve efficiency in the insurance process. The coverage we provide to our art clients will always be highly tailored, given the unique nature of the pieces involved. But there are ways in which data and technology will enable us to do this better.
We also want to use data and technology to help us to gain clearer understanding of risks. This will be of benefit to our clients, of course, as we will be able to obtain insights and see previously invisible patterns in risk, enabling us to work with our clients to understand where improvements might be made in their own risk management processes and protocols.
As the art world evolves, with new trends like blockchain technology and non-fungible tokens gaining prominence alongside more traditional art forms, so too does the way we use data to assess, manage and transfer risk.
The other panellists at the Art Market 2050 event were Lindsay Dewar, head of analytics at research and analytics firm ArtTactic; Angus Scott, founder and CEO of ArtClear, a technology firm that enables the digital fingerprinting of artworks; and panel moderator Harco van den Oever, founder and CEO of art data analytics company Overstone Art Services. A recording of the panel discussion can be accessed .
