Q&A: Art Theft and Its Impact on the Insurance Industry

Bill Anderson, a managing partner of Brooklyn, New York-based Art Guard, recently spoke with Insurance Journal about issues related to insurance and artwork. Anderson has observed that roughly more than 50 percent of art thefts occur at private homes, and with this in mind, he spoke about best practices for security within private homes, as well as museums, that house art collections.

He also discussed strategies for preventing thefts before they occur and the process for filing an insurance claim after a theft.

Anderson also explained Art Guard and the technology behind it. Art Guard was founded in 2006 in response to increases in art valuations and a corresponding increase in grab and run theft, according to the company’s website. After 18 months of user experience and installations in more than 50 museums, hotels, libraries, galleries and private collector homes, Art Guard has brought MAP (magnetic asset protection) to market to secure any stationary asset of monetary, historic or intrinsic value, the website states. It currently uses MAP systems to alarm each piece of artwork in a home or gallery individually to alert against any potential theft. Going forward, Art Guard is looking at the home automation market and internet of things technologies for future development, its website states.

Insurance Journal: What can homeowners do to prevent art theft?

Bill Anderson: The figure that the industry is probably not widely aware of is the fact that only 17 percent of homes in this country do have intrusion of perimeter security. The little secret in this industry is that a lot of people have systems – expensive, sophisticated systems – but they either don’t use them on a regular basis or they don’t even use them at all. A lot of these homes are essentially unprotected. Most homes, whether they have a system or not, will turn that system off 16 hours of the day to allow traffic in the home. It’s at those times that the objects in the home are completely unprotected. The goal is to have some object-specific protection and have that on 24/7.

IJ: Are there any challenges gallery owners face that differ from home owners?

Anderson: I think the galleries are a bit different. There are very few galleries that have guards, so it’s really up to those one or two people that are in the gallery at the time to know what’s going on. Because the shows come and go on a frequent basis, they often don’t have sophisticated means of protection. The challenge for galleries is really grab-and-run theft. It’s preventing someone from just walking in, grabbing something near the door and walking out.

IJ: If an art theft occurs at a home or a gallery, what are some of the main steps that should be taken?

Anderson: The first obvious step is to report it. This is an industry that’s notoriously secretive, and for various reasons, people don’t report art theft. It could be their privacy. It could be embarrassment. It could be for fraud because they don’t want the IRS to know. The first step is to bring your documentation up to speed and then report it, if there is a theft. If it’s over a certain amount, the FBI is interested, and so are organizations like Art Loss Recovery and Art Recovery International.

IJ: What challenges has the insurance industry faced with art theft?

Anderson: The biggest challenge to the insurance industry is its inability to mandate that its clients do something. This industry is driven by the ability to make money. It often turns on pennies in terms of retaining clients and getting new clients, so it’s a very delicate dance that insurers have to make in that regard. The other problem is, if there is a theft, there can be problems of litigation. For instance, if a painting is stolen and a payout is made, and that piece comes back into the market years later with an extraordinarily higher value, then there’s a good chance of a lawsuit. The hands of the industry have somewhat been tied in that regard.

IJ: What is the average cost of an insurance claim related to art theft?

Anderson: I would suspect it’s under $50,000, and that could imply all kinds of assets besides art which are extremely vulnerable to theft and which we can uniquely protect – jewelry, antiques, collectibles, memorabilia, wine, firearms, wall safes and even a car in a garage.

IJ: What sets Art Guard apart from traditional security systems?

Anderson: First of all, I mentioned the gallery. We came into this market with a product called Safe Hook. It was specifically designed for galleries, because we had been talking to a gallery owner that informed us that many galleries still use marbles behind the frames. This was 10 years ago. I go into meetings, and people still nod their heads over that. This was a product that is standalone, battery-operated and designed to protect hanging work from grab-and-run theft. Then, we got into our MAP technology, which is the magnetic asset protection and is much more sophisticated. The number one distinction with that product is the ability to protect almost any stationary object, from a piece of jewelry sitting on a desk to an outdoor sculpture. Batteries don’t come into contact with the work, and there’s a smaller area of contact for the protective device. It’s much more flexible in terms of its application.

IJ: Is Art Guard available across the U.S.?

Anderson: It is [available] across North America, actually, from Canada to Mexico, either in traditional systems or our MAP system. We expect to be moving to Europe and internationally later this year.

IJ: Is there anything we didn’t talk about or anything that you wanted to add?

Anderson: I think that, as we all know, the market continues to expand. Prices continue to rise, and logically, there’s going to be more theft and certainly more fraud, which is probably the number one problem in the market. That is all a threat to our enjoyment of the products or the art. I think it’s in everybody’s interest to stop looking the other way and wake up to the fact that this is a real problem, and [protection] is to everybody’s benefit.