九色视频

The art market has been undergoing a prolonged downturn, particularly for more contemporary works. But many valuations for artworks going on loan to museums remain artificially high, putting institutions in a potentially difficult position should a claim occur. Greater rigour in the type of valuations accepted for such museum loans is needed to ensure that works are not over-insured and that exhibitions can continue to bring works to public view without risking time-consuming and expensive disputes.

There is a perception that modern and contemporary art may retain its value in a similar way to certain other assets. But as with more traditional investments, art sales are also vulnerable to economic downturn; with the value of some artwork, notably post-war works, dropping in value in recent years.

According to Artnet, fine art sales at auction totalled just over $5 billion in the first six months of 2024, a decrease of 29.5% compared with the same period the previous year. And the average price-per-lot paid in 2024 fell to the lowest figure for a decade at just over $27,000.

The dip in value has been particularly marked among works by ultra-contemporary artists with auction sales of work reducing by 26% between 2022 and 2023.

It's too early to tell if the fall in values for modern and contemporary artworks is a temporary blip or represents a permanent market correction, but there is a clear need to ensure that valuations of artworks are scrutinised more carefully when they go on loan to avoid overinsurance.

Going on loan

In order to create interesting exhibitions that capture a movement, a theme or an individual artist’s work, curators are naturally keen to include works from outside of their own museum or gallery's collection. Art shows typically include a large number of intra-institutional loans - often from overseas - as well as loans from private collectors.

When artworks are transported, stored, hung or displayed somewhere different to usual, the risks to those pieces can change. For example, when work is being transported there is a potential for it to be damaged during loading, unloading or in transit to the exhibition. Some works are likely to be sensitive to changes in light, heat or humidity. And exposure to the public can also alter the risk profile.

Insurers have decades of experience helping curators and registrars to assess, understand and manage these risks. And one of the vital aspects of transferring parts of the risk to underwriters is for all concerned to be comfortable that the artworks are accurately and reasonably valued.

This works two ways, of course. If artworks are undervalued their owners may find themselves underinsured if a loss occurs. But given the recent drop in value of many artworks, if a piece is actually worth less than its given valuation, museums and their insurers could find themselves liable or drawn into costly legal disputes should that artwork be damaged in any way.

Valuation rigour

We encourage our clients to carefully consider the values they accept for work they wish to borrow for exhibitions. Most valuations that lenders ascribe to artworks tend to be automatically accepted by borrowers, but against the backdrop of the recent decrease in price for many artworks, this approach needs to be reappraised.

...values have continued to drift significantly upwards, and yet we now find ourselves in a place where the underlying sales price for many works may have fallen quite significantly.

The rule of thumb previously was that valuation of an artwork for insurance purposes would likely fall somewhere between its probate value and double the high auction estimate. Over recent years, however, values have continued to drift significantly upwards, and yet we now find ourselves in a place where the underlying sales price for many works may have fallen quite significantly.

Nobody can yet say whether the recent drop in values is part of a recessionary cycle or a more long-term correction, and arguably, the real value of art is the intangible pleasure or interest it brings to the viewer. But for those who frequently borrow and display higher value art, it's now critical that such institutions are realistic about the valuations they are accepting when collectors loan pieces to them, so that if a claim occurs, they and their insurers are not left in a difficult legal or financial situation.