Insurance, Non Insurance, Non Insurance/shared liability &Insurance/shared liability &

State IndemnityState Indemnity

Collection Mobility 2.0 Collection Mobility 2.0

Madrid, 31 May – 1 June 2010 Madrid, 31 May – 1 June 2010

Hans BuurmanHans Buurman

Deputy Director Gemeentemuseum Deputy Director Gemeentemuseum The Hague The Hague

Flabbergasted….Flabbergasted….Object 1.Object 1. Object 2.Object 2. Object 3.Object 3. Object 4.Object 4. Object 5.Object 5.

CuratorCurator € € 350,000350,000 € € 1,000,0001,000,000 € € 2,200,0002,200,000 € € 200,000200,000 € € 12,000,00012,000,000

Auctioneer Auctioneer A.A.

€ € 50,00050,000 € € 500,000500,000 € € 800,000800,000 € € 200,000200,000 € € 25,00000025,000000

Auctioneer Auctioneer B.B.

€ € 500,000500,000 € € 500,000500,000 € € 700,000700,000 € € 1,000,0001,000,000 € € 15,000,00015,000,000

Value of ObjectsValue of Objects

the differences in valuation are a the differences in valuation are a cause of concerncause of concern

the determination of value is the determination of value is subjectivesubjective

Gemeentemuseum The Gemeentemuseum The HagueHague

Top Collection: 400,000 visitors a year Top Collection: 400,000 visitors a year € 425,000 insurance premium in 2009€ 425,000 insurance premium in 2009

Non InsuranceNon Insurance

A short term consensus result, at non A short term consensus result, at non insurance in case of total loss or theft, insurance in case of total loss or theft, is unrealisticis unrealistic

Necessary to concentrate on other Necessary to concentrate on other methods of reducing insurance methods of reducing insurance premiums, based on shared liability premiums, based on shared liability or own cleverness. or own cleverness.

Possibilities to reduce costs Possibilities to reduce costs of insurance premiumsof insurance premiums

Stop insuring depreciationStop insuring depreciation Stop insuring the risk against terrorism and Stop insuring the risk against terrorism and

war war Stop evaluating the object as high as possibleStop evaluating the object as high as possible Put out to tender at top collection exhibitions Put out to tender at top collection exhibitions If the borrower pays for insurance, let it If the borrower pays for insurance, let it

happens against normal, financial conditions, happens against normal, financial conditions, not against immense profitnot against immense profit

Are there more possibilities in saving insuring Are there more possibilities in saving insuring premiums ??? premiums ???

Introduce a European-wide state indemnity Introduce a European-wide state indemnity scheme based on a standard cover scheme based on a standard cover

Content of Insurance Content of Insurance CoversCovers

DAMAGE DEPRECIATION

TOTAL LOSS

THEFT

TRANSPORT

35% Incl. TERRORISM

25%

STAY 35% Incl. TERRORISM

25%

TRANSPO

RT RETURN

35% Incl. TERRORISM

25%

Insuring depreciation Insuring depreciation

object is unique; it is impossible to object is unique; it is impossible to replace this objectreplace this object

after restoration, the object is in the after restoration, the object is in the best possible condition best possible condition

there is no reason to suppose that a there is no reason to suppose that a restored object has a less artistic or restored object has a less artistic or cultural valuecultural value

the premium will decrease 35% the premium will decrease 35%

Stop insuring depreciationStop insuring depreciation

Insuring against Terrorism Insuring against Terrorism and Warand War

The premium of covering against The premium of covering against terrorism and war adds up to 40% of terrorism and war adds up to 40% of the total premium.the total premium.

The chances of terrorism and war are The chances of terrorism and war are minimal (war doesn’t come overnight)minimal (war doesn’t come overnight)

As long as this part of the premium is As long as this part of the premium is sky-high, don’t insure this risksky-high, don’t insure this risk

insuring against the risk of insuring against the risk of Terrorism and War is not necessaryTerrorism and War is not necessary

Insurance PremiumInsurance Premium Value of the objectValue of the object Permillage per euro Permillage per euro

For example insurance cover For example insurance cover Gemeentemuseum The Hague, object valued at Gemeentemuseum The Hague, object valued at € 20,000,000 originated from a European € 20,000,000 originated from a European museum, exhibition stays 3 month:museum, exhibition stays 3 month:

TransportTransport : 2 x 0.15 o/oo x € 20,000,000 = € : 2 x 0.15 o/oo x € 20,000,000 = € 6,000 6,000 StayStay : 3 x 0.075 o/oo x € 20,000,000 = € : 3 x 0.075 o/oo x € 20,000,000 = € 4,5004,500

The value of objectsThe value of objects

I would be preferable to evaluate I would be preferable to evaluate objects as low as possible and not as objects as low as possible and not as high as possible.high as possible.

.. Nude Green Leaves, and Blust : Nude Green Leaves, and Blust : PicassoPicasso€ € 81,000,00081,000,000

Reaction of a curator: Reaction of a curator: “our” Picasso “our” Picasso has more quality, the market price is has more quality, the market price is higher than it was last week, also the higher than it was last week, also the new value is going up with € new value is going up with € 20,000,000 .20,000,000 .

Invite more brokers to Invite more brokers to tendertender

This produces substantial differences in premiums This produces substantial differences in premiums

Example:Total value of the exhibition € Example:Total value of the exhibition € 500,000,000500,000,000

Dutch indemnityDutch indemnity

Broker a. € 145,000Broker a. € 145,000

Broker b. Broker b. € 125,000 € 125,000

Broker c.Broker c. € 160,000€ 160,000

The borrower pays always The borrower pays always the bill, but this can be in a the bill, but this can be in a

different waydifferent way It concerns a paintingIt concerns a painting The value is € 20,000,000The value is € 20,000,000 From a European museumFrom a European museum The exhibition lasts three monthsThe exhibition lasts three months

Borrower’s broker: € 10,500Borrower’s broker: € 10,500(2 x 0.15 o/oo + 3 x 0.075 0/00) x € (2 x 0.15 o/oo + 3 x 0.075 0/00) x €

20,000,00020,000,000

Lender’s broker: € 17,600Lender’s broker: € 17,600(2 x 0.2 o/oo + 3 x 0.16 0/00) x € 20,000,000(2 x 0.2 o/oo + 3 x 0.16 0/00) x € 20,000,000

Borrower vs. lenderBorrower vs. lender

The leading principle for insurance would The leading principle for insurance would be: be:

Best quality of the insurance cover vs. the Best quality of the insurance cover vs. the best price for the borrower best price for the borrower

The lender is responsible for the content of The lender is responsible for the content of the insurance coverthe insurance cover

The borrower is responsible for the The borrower is responsible for the contract with the broker; no “profitable” contract with the broker; no “profitable” influencesinfluences

Special Insurance cover for outgoing loans

Gemeentemuseum’s special cover for outgoing loans

A special cover with our broker Same conditions for outgoing and

incoming loans The borrower of our objects has to pay

the very lowest price for this insurance (without profitable permillages)

No discussion about the insurance cover

More possibilities to save insurance premiums

What will be the reason to insure the whole value of an exhibition during transport; are all the object at the same time “on the road” ??

Is it necessary to insure the whole value of the exhibition ??

State IndemnityState Indemnity State indemnity helps to reduce insurance State indemnity helps to reduce insurance

costs substantiallycosts substantially Differences in coverages make it difficult for Differences in coverages make it difficult for

lenders to accept the state indemnity of all the lenders to accept the state indemnity of all the different countriesdifferent countries

It would be helpful if:It would be helpful if: There would be only one state indemnity scheme in There would be only one state indemnity scheme in

EuropeEurope The museums develope a fixed cover for this The museums develope a fixed cover for this

indemnityindemnity The State indemnity covers the whole value of the The State indemnity covers the whole value of the

exhibition. exhibition.

ConclusionsConclusions

Museums in Europe can reduce insurance Museums in Europe can reduce insurance costs costs

They don’t need direct help from others They don’t need direct help from others

But: museum management at both sides But: museum management at both sides (lender and borrower) would have to do (lender and borrower) would have to do this with a collective policy; shared liability.this with a collective policy; shared liability.

Let us aim to reduce insurance costs! Let us aim to reduce insurance costs!