Fine Art, Jewellery and Specie Insurance Market Update

28 April 2016

Six months on from our last market update, now seems like a good time to discuss the changes that have occurred in early 2016.

With the mergers between XL/Catlin, Mitsui/Amlin and of course Chubb/Ace now complete the real question is where does this take the marketplace? Whilst these acquisitions and mergers are a consolidation of carriers the effect has been the opposite. The market hasn’t been this competitive for many years, with market share now appearing to take the place of risk based underwriting. Whilst this may be an over-statement it is certainly the direction where the market appears to be heading. 

So what is on the horizon within this niche sector? 

More mergers and acquisitions are a strong possibility. The very recent proposed purchase of ANV Loyds Syndicate by AM Trust is a prime example. If these cases continue, what impact could this have? The new capacity that has entered the market is trying to gain market share, this at the same time as the carriers who have recently combined forces trying to maximise their scale, creating an influx of competition. We are starting to see some of the very niche areas of this Specie business being underwritten by insurers that had previously not considered some of those specialised classes as a ‘niche within a niche’. With all this activity and choice making the right decision of insurer is key, but ensuring all options remain open to the client is also very important - each option can form an important part of an overall client strategy. 

The element of the market that is fundamental at such a competitive cycle is claims performance of the chosen carriers. Claims performance requires increased focus at this period as whilst premiums are falling insurance carriers will begin to feel pressure if claims activity increases. Therefore attention to the claims function needs to come to the forefront of the discussion with client, as this is a real area of added value and ultimately is the reason for the insurance purchase. The fact that some insurers and some brokers are increasingly outsourcing their claims function to less expensive, offshore cost centres and/or third party service providers is a testament to this misplaced belief, which is only exaggerated in this cycle. 

Undoubtedly, there is recognition in the industry that claims can have a vital and differentiating role to play. Successful organisations have allowed the claims function to be part of the overall offering to clients. It is also common for such organisations to have claims directors in the management structure to enforce the strategy and form a fundamental part of the client offering. Such organisations encourage claims experts to hold roles at every level of the business, from product design and development through to client delivery. After all, claims experts understand those elements that went wrong in their prior experience and therefore are among the best placed people to identify possible solutions to meet client requirements. 

How can clients prepare for these changes in the current trading circumstances in order to ensure stability is achieved whilst making the most of this competitive environment? 

During this cycle it is important to understand exactly what you want to achieve from your renewal from the outset. Starting the renewal early is always a key element to achieving the ultimate outcome. Having clear objectives including coverage, claims performance and of course cost are all important features. Managing expectation internally is important for a client at this time as savings are undoubtedly available, however all market-cycles end at some-point. 

Working with a specialist broker during this time remains key in obtaining these objectives. With claims performance being a significant consideration a broker can help clients make the right choices of carriers. 

For further information, please contact Barry Vickery, Senior Partner, Fine Art, Jewellery and Specie on +44 (0)20 7528 4598 or email