Dr. Dietrich von Frank is president and chief executive officer of AXA Nordstern Art Insurance Corp.
By Dennis Pillsbury
Dr. Dietrich von Frank is president and chief executive officer of AXA Nordstern Art Insurance Corp.
For most collectors of fine arts, what they collect is more than an investment or a hobby, it is a passion. Whether they collect teddy bears or Impressionist paintings or beer cans or antique automobiles, these objets d'art are items that they care about intensely. And coverage of these items needs to be handled with that in mind and should take into account any of the idiosyncrasies the potential insured may have when it comes to his/her her collection.
"You're really insuring the owner of the artwork," notes Dr. Dietrich von Frank, president and chief executive officer of AXA Nordstern Art Insurance Corp. "Most of the coverage involves care, custody and control more than the physical artwork." Dr. von Frank continues that this is a "very service-driven business where insureds need to be treated very carefully due to the emotional attachment they may have toward a particular work of art or collection."
AXA Nordstern Art Insurance Corp. was founded in the United States in 1987 as Nordstern Insurance Co. of America by insurance and art professionals. It became a member of the AXA Group in 1997 and changed to its current name in 1998. Its roots go back to 1866 when Nordstern Insurance was established in Europe. The U.S. company is headquartered in New York and has offices in Beverly Hills, Chicago and Dallas. According to Dr. von Frank, it is "the only insurance provider in the world that is focused exclusively on fine arts and collectibles." It has an "A" rating from A.M. Best.
Coverage is written as a floater policy in the inland marine line and is quite flexible. The company is admitted in all jurisdictions except Vermont. Dr. von Frank adds that, in addition to flexible coverage, AXA Nordstern Art offers three distinct advantages:
Vivian L. Ebersman is director of the Fine Art Department for AXA Nordstern Art.
1) Experienced underwriters who specialize in fine arts.
2) A fine arts department that includes four art historians, in addition to Dr. von Frank, who assess the values of artwork and give advice to collectors. "They can assist in the evaluation and appraisal of art work for insurance purposes," Dr. von Frank points out.
3) A centralized claims department in the New York headquarters that knows how to deal with all the various claims involving fine arts losses. "This is a highly experienced office consisting of claims professionals who know what can happen and what to do when a loss occurs," he says. "Much of this is hand-holding of the insured who has seen his or her passion in shambles." He adds that these people "have a high degree of expertise in dealing with very high loss limits. We provide coverage to dealers, auctions houses, museums and exhibitions as well as private collectors, and our claims people have to deal with some very high loss limits." He points out that the company currently is helping to provide coverage for a major Van Gogh traveling exhibition.
Another advantage is that the company "assists its insureds with the overall protection and preservation of their collections." Among the art services provided by the company are evaluations that assess the current market values of a client's collection(s); loss prevention advice and disaster planning; and consulting on transportation, shipping and handling. "Last year, we launched a Web site--www.axa-art.com--that lets us reach out to more enthusiasts and private collectors who are looking for professional advice," Dr. von Frank adds. The site includes a section called "Collector's World" that offers information on protecting and caring for a collection; provides information on art conservation practices; and includes updates on legal and fiscal aspects of owning art. The site also serves as a platform for dialogue with brokers and collectors.
Nicholas A.F. Reynolds is responsible for the Chicago and New York offices of AXA Nordstern Art.
Dr. von Frank says, "Ninety-nine percent of our business is through brokers because of their direct relationship with the insureds. As I mentioned earlier, we really are insuring the client as well as the collection. We ask the brokers questions about the insured and evaluate the longevity of their relationship with the client. We try to develop a good picture of the insured."
One factor that is considered is how a person collects. "This tells you something about how values are being established and provides us with hints as to what type of collector the person is. Do they buy at auctions, galleries, directly from the artist, or are they advised by private dealers? We here at AXA Nordstern Art are collectors ourselves and use our own experience to try to develop a profile of the insured."
He says that careful underwriting is "especially important during an economic downturn. There tends to be an increase in suspicious claims during a downturn and, as a co-founder of The Art Loss Register, we are uniquely able to determine if a claim appears fraudulent. But, even more important, through careful assessment of clients, we often can avoid providing coverage to individuals who may have questionable intentions. We also work with the broker if there is a suspicious claim and discuss options before taking any action."
He continues that values of collections normally fluctuate, but this can be even more dramatic during a downturn or an upturn. "We have annual policies and reevaluate objects when we renew the policy."
Policies basically have two ways of dealing with the values of a collection. Insureds can purchase an agreed value policy that sets the values on the items at the inception of the policy, or they can opt for a current market value policy, which would assess the value at the time of a loss.
Vivian Ebersman and Nicholas Reynolds note the features of a painting.
Restoration of a damaged objet d'art is a key part of the services provided, especially when the particular piece is unique. "We look over a damaged piece to determine if restoration should even be attempted," Dr. von Frank explains. "If restoration is attempted, we will then re-evaluate the piece to determine its market value. This may result in a partial loss or, if the restoration is unsuccessful, a total loss may be declared. We work with a wide circle of highly reputable restorers and conservators and third-party appraisers who have excellent reputations in the art world."
Dr. von Frank concludes, "Agents really should consider a stand-alone fine arts policy for clients who are serious collectors." He admits that there is more work involved in having to administer two separate policies rather than just having a rider to the homeowners policy, "but the art policy is more comprehensive. One example," he continues, "is the 90-day acquisition clause, which provides automatic coverage on newly acquired property up to 25% of the total policy limit within a 90-day reporting obligation.
"Comprehensive coverage, coupled with services of a specialized art insurer, can help the agent to maintain a better relationship with the collector. Our people speak their language and can handle 'delicate' situations like the evaluation of a family heirloom that may not have a high value in the international art marketplace, but has a very high emotional value for the insured. We explain that, while it is a beautiful piece that they should enjoy and protect, it just is not a valuable object to the art market at this point in time." *
For more information
Web site: www.axa-art-usa.com