Art storage was once a very simple prospect. The dealer or collector would contact the art warehouse and agree a contract to securely store the art in their facility. The client’s investment was now secured, without the concern of theft and time to sleep-easy.
The question remains is theft the only concern? In May 2004 the world renowned art storage facility Momart suffered a fire at their Leyton, East London premises. Many famous dealers and collectors had pieces stored there which attracted considerable media attention as the majority of the housed works perished in the inferno. Whilst art owners know fire to be a real peril, many hadn’t considered one on this magnitude before.
Three immediate considerations were developed:
- From the perspective of the storage facility owners – Security is to have greater consideration in order to provide better all-round protection and to review and limit the ability of fire to spread, reducing the need overall fire exposures.
- From the perspective of the insurance market – We need to have a mechanism to understand what exposures we have in each of these locations, understanding the risk exposures and values is key to underwriting and understanding the risk exposures.
- From the perspective of the Art owner – We need to ensure the art is adequately protected.
What does this mean for our clients?
This incident prompted both owners of art and insurers to rethink the prospect of art warehousing. A Global Risk Assessment System Platform (GRASP) was developed to set an approved standard for risk understanding.
The other concern for art owners is the insurers need to know the whereabouts of their collection. Art owners are notoriously but understandably secretive and these declarations can create concerns for some clientele.
Fortunately most art dealers or collectors are extremely smart. Many storage facilities have sprung up across the globe over the last decade but freeports remain the preferred repositories because of the tax advantages associated with them.
The attraction with freeports is that the art is deemed to be technically in transit and therefore succeeds to repel any tax association.
Freeports most notably exist in Switzerland, Luxembourg, Beijing, Singapore and more recently Delaware, USA.
For further information, please contact Lee Taylor, Partner, Fine Art, Jewellery and Specie on +44 (0)20 7466 6249