Many 'Priceless' Art Collections Go Underinsured

Two men approached Rotterdam's Kunsthal museum in the dark of night on October 16, 2012, bypassed the deactivated security system and silently opened the emergency door. Within two minutes, seven works by the world's best-respected artists were lost forever.

“A small percentage of what is stolen in the art world is ever recovered,” says Richard Nicholson, executive director of Willis's Fine Art Jewelry and Specie (FAJS) practice. “The art loss register (ALR) reports that 5 to 15 percent of stolen objects are recovered, but this is a very generic statement, as it probably includes anything with an 'art flavor': not only pure fine art objects but antiques, antiquities, ceramics, furniture; perhaps jewelry and other objects that have a relatively low value.”

The pieces that were stolen from the Kunsthal exhibit, which was donated by the Triton Foundation, included paintings by Henri Matisse, Pablo Picasso and Paul Gauguin. Their whereabouts were eventually reported by the mother of suspected perpetrator Radu Dogaru—after she initially said she had burned them in a sauna in order to destroy evidence that could confirm her son's guilt in the scheme (Dogaru claims he had hidden the paintings, wrapped in plastic, at his mother's house in the tiny Romanian village of Carcaliu).

Forensic professionals dispatched from Romania's National History Museum then examined the ashes from the burn to determine if their materials once colored Claude Monet's “Charing Cross Bridge, London,” Meyer de Haan's “Self-Portrait” and Lucian Freud's “Woman with Eyes Closed.”  

Allegedly, they found evidence of dated pigments that were commonly used around the time of the painting's creation, as well as nails in the artwork's scorched remains. A tangled web of cross-examination ensued in which Mrs. Dogaru renounced that she had burned the paintings, a statement perhaps motivated by the fact that destruction of art carries a longer sentence under Romanian law than assisting criminals.

The Triton Foundation has since collected $24 million in insurance and ceded ownership over the the missing art. Ultimately, the paintings are still at large, which begs the question: what role does insurance have in protecting the value of priceless things?

“The insured value of the objects was, we understand, considerably less than their true market value, perhaps because the owner of the paintings bought insurance for the amount at which he purchased them and didn't bother to increase the insured value over the years, or he may not have wanted to pay greater premiums,” says Nicholson.

He continues, “Those who buy art for investment as much as enjoyment will typically insure its full value, but those who only buy it for enjoyment realize that it's irreplaceable once destroyed, and don't lean so heavily on insurance.”

In an earlier blog post, Nicholson recalled that in 2001, the mother of art thief Stephane Breitweiser, who allegedly stole notable works from about 170 European museums in the course of a decade, destroyed the paintings and canvases her son left at her home following his arrest.

Additionally, a 2010 theft from the Musée d'Art Moderne in Paris, valued at $130 million, and a robbery that occurred at Boston's Isabella Stewart Gardner museum 23 years ago—which only insured its collection after it was robbed—are yet unsolved.

“Large museums, like Boston's Isabella Stewart Gardner Museum that experienced a major theft in 1990, can never insure the full value of their art collections, if they insure at all, which can run into the billions of dollars of value,” Nicholson told National Underwriter Property & Casualty. “They may determine the maximum possible loss they're likely to sustain from a cause such as fire or flood, take steps to mitigate it, and buy insurance at that limit.” 

In the case of borrowed exhibits, such as the one at the Kunsthal, the lending institution will obtain a market valuation from a leading auction house or other expert and the borrowing institution will usually be responsible for the coverage and premium for the duration of the loan.

According to Nicholson, the advent of the ALR in 1991 and the FBI's National Stolen Art file, launched this decade, has made it easier for art buyers to check on the provenance of the work they are purchasing and if they are marked by an inventory of stolen artworks.  

However, Nicholson asks, “Who knows how many other stolen artworks have been destroyed by the perpetrators or their accomplices? It can take more than a generation to recover stolen works.”

Perhaps more answers will be found later this year, when six people will go on trial in connection with the theft at the Kunsthal.