Insurers see opportunity in India's growing sales of art
With an estimated $940m worth of declared art in India, insurance firms are beginning to tap the nation's growing high net worth market. "Given that art and other valuables are increasingly considered as an asset class, demand for art insurance is poised to grow in the future", said Mukesh Kumar, executive director at HDFC Ergo General Insurance. The true value of the Indian art market is thought to be significantly larger than $940m, with many works of art and valuables undeclared.
Art and valuable insurance

Numerous high networth individuals buy and hold art as connoisseurs. There are also a number of investor-collectors who view art as a good financial investment. While they were earlier wary of insuring their collection for fear of disclosing details to a stranger, times are well and truly changing. Art and other valuables are highly vulnerable to perils like fire, burglary, theft, flood, malicious defacing, and accidents even when they are either stored, displayed, exhibited or in transit. This has unveiled a huge market for insurance companies, who are vying for a slice of this top-dollar space. The target customers include business promoters, corporate honchos, sport personalities, movie actors and their families.

"Given that art and other valuables are increasingly considered as an asset class, demand for art insurance is poised to grow in the future. The estimated value of art that can be insured in India is about Rs 6,000 crore," Mukesh Kumar, executive director, HDFC Ergo General Insurance, told DNA Money. Only a small segment is covered with art insurance policies since there is lot of undisclosed art/valuables in the Indian market, he said.

The items insured under 'art and valuable insurance' usually include fine arts, paintings, expensive carpets, watches, clocks, expensive furniture, chandeliers, statutes, sculptures, books, expensive and antique jewellery (gold / silver/ diamond), Kumar said.

"The sum insured for each and every art and other valuables need to be fixed at the time of inception of the policy which would be the value to be agreed by insured and insurer based on the valuation certificate from a professional valuer," Rakesh Jain, CEO, Reliance General Insurance, said. There is no standard premium rate, but it depends primarily upon coverage to be offered, type of assets to be insured, security and protection measures available at the premises, sum insured per article or per location, whether it is kept at one place or moved to different places for exhibition.

Sanjay Datta, chief-underwriting, claims & reinsurance, ICICI Lombard said the claim experience has not been adverse on this line of business where HNIs, corporates ,and gallery owners are the company's main customers. "The premium is calculated on a certain percentage basis applied on a total painting cost and the premium rate depends on the risk," he said.

Narrating an instance of how art insurance plays out, Jain said a Rs 3-lakh value sculpture of a client accidentally fell down while shifting within the office premises. Surveyors observed that the sculpture got broken in to three pieces and lost its identity, beyond possibility of rectification. In view of the same, the surveyor's report was obtained and the claim was processed for Rs 2.9 lakh.

Some insurers like TATA AIG have exclusive policies to cover highly valuable items. Parag Ved, executive vice president - consumer lines, Tata AIG General Insurance said, "As part of the Private Client Group policy which deals with insuring personal assets & valuables, we at TATA AIG provide insurance cover for jewellery & collectibles like artwork, watches, antiques, wine, pens, rare stamp & coin collection." There are comprehensive 'all risk' coverages to insure virtually any fine collectible or valuable –from a diamond necklace to Raja Ravi Verma painting, Ved said.

Private Client Group, built on experience, both globally and locally, tries to curate a thorough protection plan suited to an individual or family's requirement to safeguard their prized possessions. "India, till recently had a lot of undeclared wealth and ultra HNIs were sceptical of insuring their private collection for fear of disclosing such details to an outsider. But as customer awareness is building, we are seeing a significant more number of inquiries and demand for such customized covers," Ved said.

Interestingly, standard property insurance policies like fire policy do not cover such items for their market value as these values are notional and subjective. If at all the coverage is taken under fire policy, it would be limited to the intrinsic cost of material used and would exclude the sentimental value part, experts said.