Marketing

An eye for art

Visionary Huntington T. Block turns passion for art into a thriving insurance brokerage

By Elisabeth Boone, CPCU

When discussing the somber paintings created during Picasso’s Blue Period or contemplating the elaborate design of a vase from the Ming Dynasty, perhaps the last thing that enters one’s mind is the subject of insurance.

For the creators, collectors, dealers, and exhibitors of priceless art works, however, the issue of insurance is top of mind. Many works are valued at well in excess of $100 million, and with art prices in the United States rising by an average of 27% in 2006, significant values clearly are at risk.

Just as clearly, arranging insurance coverage for valuable objets d’art is no task for amateurs. Throughout the United States and around the world, the owners and exhibitors of fine art works turn to the experts at the Huntington T. Block Insurance Agency, Inc. (HTB), for their risk management and insurance needs.

Now the leading provider of insurance for the fine arts community, the agency was established by its namesake, an insurance broker in Washington, D.C., who is also a connoisseur of the arts. The agency, which opened in 1962, originally wrote a broad spectrum of Main Street risks but, over time, turned its focus on niche business including art, directors and officers liability for nonprofits, association insurance, and convention cancellation coverage. But it is on the world of art, from museums and galleries to private collectors, that Huntington T. Block has left his most indelible mark.

Based in Washington, HTB also has offices in New York and San Francisco, and since 1991 has been a member of the Aon group of companies. The agency is staffed with insurance and risk management professionals who have first-hand knowledge of and appreciation for fine art, historical, and scientific objects.

At the helm of HTB is Joseph C. Dunn, president and chief executive officer. After completing a master’s degree in American history in 1990, Dunn says, “I came to Washington to work on Capitol Hill. While I was looking for a job there, I started temping at HTB.

“After I had worked here for a few weeks, Mr. Block called me into his office and offered me a job, and you can’t say ‘no’ to Huntington T. Block,” Dunn says with a chuckle. “Without any pretension he’s the most patrician American I’ve ever met, and his reputation endures as one of the most highly respected icons in the business.” In 1996, Huntington Block retired from active management of the agency.

Dunn started out as a professional liability underwriter and rose through the ranks, becoming president and CEO in 2006. He now has the honor of heading the agency’s fine arts unit, a position he finds both challenging and enjoyable.

“I come to work with a fresh sense of purpose every day,” Dunn says. “We have an amazing book of business, and our clients are incredible.”

Huntington T. Block Insurance Agency operates primarily as a retail brokerage, although it does have wholesale capabilities, Dunn says. “We have an exclusive underwriting facility with Lloyd’s of London,” he explains. “In fact, we have the largest fine arts binding authority dispensed by Lloyd’s in the United States for this line of coverage.”

Rising demand

As noted earlier, art prices in the United States rose by an average of 27% in 2006. What factors are driving this growth?

“It’s a question of supply and demand,” Dunn says, “and consumption based on new wealth: petrodollars from Russia, and the burgeoning upper class in countries like China and India. It’s primarily contemporary art that’s escalating dramatically in price,” he notes. “The old masters are perennial favorites, and they have been increasing steadily in value, but today what’s really hot is contemporary art.

“We’re also seeing elevations in the prices of Chinese folk art and Russian antiquities,” Dunn continues. “There’s a big drive to get back the Fabergé eggs and icons and other Russia-specific art that left the country after the 1917 revolution.”

The recent strong demand for fine art, Dunn comments, was led by hedge fund managers in the United States and overseas who seemingly were becoming billionaires overnight. “Now that they’re having problems, we anticipate that art prices will begin to stabilize as Wall Street sorts through its issues related to the mortgage banking crisis,” Dunn says. “I anticipate that consumption from Russia, China, India, and other markets, like Brazil, will help maintain the current pricing.”

Not everyone who collects fine art is a true art lover, Dunn observes. “A concern for us is people who see art simply as an investment or a commodity,” he says. “Art certainly is a sound long-term investment, but we want to work with people who are passionate about art. In our experience, people who love their art take care of it. They hang, ship, store, and insure it properly. Simply put, genuine art lovers are a better risk.”

Diverse client base

Among the agency’s 2,500-plus clients are museums, including their so-called “blockbuster” exhibitions; galleries; fine art and antiques dealers; corporate, university, and private collections; artists, framers, and conservators; auction houses; consultants, and shipping companies.

Among the more than 500 museums worldwide for which HTB arranges coverage are art museums, natural history museums, historic houses and sites, and science and technology centers.

HTB is actively involved in the American Association of Museums (AAM), regional and affiliated museum organizations, the Art Dealers Association of America (ADAA), the New Art Dealers Alliance (NADA), the International Fine Print Dealers Association (IFPDA), The American Institute for Conservation of Historic and Artistic Works (AIC), and others. Through these affiliations, HTB has created custom policy forms that address the specific needs of member organizations. Dunn states proudly that, as of May 2007, the agency is the endorsed provider of fine arts coverages for members of the American Association of Museums.

HTB offers specialized programs for three primary classes: museums; private collectors; and commercial galleries and private art dealers. The agency also has a significant book of conservators and artists. Minimum premiums typically start at $2,500. The agency has binding authority with both foreign and domestic markets; domestic coverage is placed only with carriers that have an A or better Best’s rating.

For museums and cultural institutions, permanent fine arts collection coverage protects collections on the premises, at any other location, and in transit. Coverage applies to the museum or institution’s property, property approved to be purchased, property in which there is a joint interest, and property on long-term loan (usually more than six months).

Fine arts temporary loans coverage is designed to protect the property of others on loan to the insured museum, cultural institution, or commercial gallery, or property of the insured that is on loan to others.

Museums and cultural institutions that arrange and coordinate exhibitions can purchase exhibition coverage to protect the works of art that are involved, wherever they are displayed and whether they are owned or borrowed.

Museums also must have directors and officers liability coverage, and Aon administers a special D&O program that was created by Huntington T. Block and that has been endorsed by the American Association of Museums since 1982.

Commercial fine arts coverage protects artists, conservators, framers, galleries, private dealers, antiques dealers, auction houses, consultants, and art packers, shippers, and handlers. The policy covers artwork owned by the insured as well as items in the insured’s care, custody, or control.

Fine arts legal liability coverage can be written as an enhancement to commercial fine arts and permanent fine arts policies. Coverage protects the insured against legal liability for damage to works the insured has been instructed not to insure.

For private collectors, HTB provides coverage for physical damage, vandalism, and theft while objects are on display or stored in a client’s home, on loan for public exhibition, or in transit. In addition to fine arts, coverage is available for private collections of coins, books, historical artifacts, ceramics, jewelry, furs, yachts, and classic automobiles.

Corporate fine arts coverage protects collections while on the corporate premises or on loan to others.

Risk management focus

Insurance, of course, is just one part of the equation. Equally important is the agency’s commitment to sound risk management and claims handling practices.

HTB loss control experts can perform safety assessments, risk control surveys, security evaluations, claims analysis and tracking, and disaster planning services. These services are offered at no additional charge.

The agency uses only experienced fine art adjusters to settle art-related losses. In the event of partial damage, services include conservation and restoration. “The coverage provides for payment of these expenses plus any resulting loss in value,” Dunn explains. The settlement process is mutually agreed upon among all interested parties.

HTB uses the Art Loss Register’s tracking system, which notifies art and law enforcement communities worldwide when a work of art is stolen.

Museums, which often host so-called “blockbuster” exhibitions that draw thousands of visitors, must take particular care to protect the priceless objects on their premises.

“Museums—especially those that are accredited by the American Association of Museums—do a superb job of mitigating risk,” Dunn says, “and there’s a good balance between protecting the art and keeping it accessible to the public. They know how to present objects in a way that mitigates the risk of damage. Artworks are hung at a certain height, and ropes and stanchions are used to allow visitors to view the works from an appropriate distance.”

Even the highest level of risk management expertise can’t protect an insured facility from acts of God, Dunn observes. “It was a nor’easter that resulted in our greatest loss over 45 years,” he says. “The storm caused a portion of the roof to cave in, resulting in damage to many works and losses in the tens of millions of dollars.”

New affinity program

The agency specializes in writing coverage for smaller museums and “just started a new affinity program that’s recognized by the American Association of Museums,” Dunn says. “Our goal in setting up this program is to make sure that the collections of small and mid-sized museums are properly insured at competitive rates,” he says. “In some cases I think these institutions may be paying too many premium dollars for the wrong coverage.

“That’s why our London facility is so important,” he continues. “We maintain a great book of business with a broad spread of risk that’s comprised of many small museums, collectors, and galleries, and we have some very large ones whose names you would recognize immediately. Our goal is to grow the business in like kind and to make sure that we’re serving the needs of our clients,” Dunn asserts. “To help us achieve that goal, and to support the fine arts facility, HTB fields both a commercial and a high-end personal lines department in addition to a specialty fine arts claim unit.”

What’s more, Aon subsidiary Aon Affinity is developing a suite of health and benefits products that HTB will be able to offer its insureds.

“We want Huntington T. Block to be the one-stop insurance source for museums, galleries, and private collectors,” Dunn declares. “Our goal is to help museums and people who love art be sure that it’s insured properly and at a competitive price.” *

For more information:
Huntington T. Block Insurance Agency, Inc.
Web site: www.huntingtontblock.com