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Executive Spotlight

8 Questions for Richard Northcott

This Ironshore executive didn’t get into fine art on purpose, but has developed expertise in its beauty and its risks.
By: | May 4, 2018 • 6 min read

Ironshore Director of Fine Art & Specie Richard Northcott took an indirect path to insurance, as many in the field do. But in the process, he found his niche and built decades worth of knowledge in the world of fine art.

In this Q&A, Northcott describes the evolution of his experience in the high-stakes world of fine art and delves into emerging risks facing museums and other art professionals.

R&I: How did you get into the world of fine art?

Richard Northcott: I found myself like so many people in our industry falling into insurance. I actually graduated back in 1989 with a degree in agriculture. But three years of studying agriculture at university taught me that in the UK, unless you own your own farm, it’s hard to build a successful career. So I started looking for graduate jobs.

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There was an advert in the Times newspaper in London for a graduate trainee at a small Lloyds broker. They only employed about 30 people. I turned up for the interview. I spent 40 minutes talking to one of the company directors about cars because he’d just bought a new car and cars were my hobby. When I got home after the interview and told my mother, she said “Richard, how could you?”

But something must have gone right because they called at 9 a.m. the next morning and said, “When can you start?” I walked into a broker not even knowing that they did fine art insurance.

R&I: How steep was the learning curve?

RN: In those days they would start you off with the most basic tasks. I spent 3 days in the post room, 4 months doing processing, and then moved to the claims department for about a year. Then finally they promoted me into the placing department as a fine art broker, and that’s where I really started learning their trade.

I walked into a broker not even knowing that they did fine art insurance.

The company was sold and I ended up running a department called the Specialties Division in the larger group which was a multi-specialty unit, but fine art was always at its core. I’ve grown up in the broking community. I’d been a broker for 22 years.

R&I: How did you move from brokering to underwriting?

RN: In 2011, I was approached by an underwriter that I did a lot of business with, who shared with me that he was leaving his company and had offered to help his employer find a replacement. He asked if I was interested, and I jumped at it.

One of the first things I did when I became an underwriter was to go through the portfolio of business that I inherited and make some quite severe changes. We got rid of about $10 million of premium in a year, business that wasn’t in my appetite, in my experience or simply was not profitable. Then we set about rebuilding the portfolio of business in the shape that I wanted.

Today we have a book of business that’s 65 percent fine art, about 25 percent general specie, about 5 percent classic cars and motor sport, about 3 percent cash in transit and about 2 percent jewelry.

R&I: What’s your favorite aspect of underwriting fine art insurance?

Richard Northcott, Director, Fine Art & Specie, Ironshore

RN: The most enjoyable part of my job as a broker was going out and meeting clients, and I really wanted to maintain that client contact as an underwriter. I spend a fairly substantial part of my time out on the road meeting with customers, going to see some of these wonderful art collections and museums around the world and talking to the registrars, and the curators, and the risk managers of these institutions about what their issues and concerns are.

R&I: What are the top issues museum risk managers are facing?

RN: Art is becoming more valuable. A Picasso or Monet can sell for as much as $250 million at auction. Whole collections can be worth billions. Last year, for example, I saw a Francis Bacon show that was valued at around $2 billion.

Increasing values also increase exposure. Museums commonly organize exhibitions and art shows. Every time you are moving, storing and displaying art, the risk of damage or deterioration increases, and sometimes the financial loss potential is very significant.

Art is becoming more valuable. A Picasso or Monet can sell for as much as $250 million at auction. Whole collections can be worth billions. Last year, for example, I saw a Francis Bacon show that was valued at around $2 billion.

We’re seeing clients and their attorneys take note of that. They are getting involved in the drafting of loan agreements, which have become increasingly complex as drafters seek to shift the lion’s share of liability onto borrowers.

R&I: How exactly are loan agreements changing?

RN: A decade ago, loan agreements were pretty standard. Most included a clause requiring the borrower to carry a boiler-plate fine art insurance policy. Those policies typically exclude coverages for acts of war or terrorism, confiscation, general wear and tear and deterioration. Now lenders sometimes want borrowers to carry those coverages. Some lenders of contemporary art also ask for cyber coverage, since modern artists increasingly experiment with digital medium, which could expose them to a systems breach amongst other risks.

The biggest and most concerning change, however, is that lenders are increasingly asking for borrowers to accept ‘absolute liability’ in contracts.

R&I: What is absolute liability?

RN: By asking borrowers to accept absolute liability, they hold them responsible for anything that happens to a piece of art while it is in the borrower’s care, including while it’s in transport and on display.

That could encompass a wide range of circumstances and scenarios. Borrowers could even be on the hook for a loss of market value that occurs while they are responsible for the art. They could be liable for any natural deterioration that occurs. They might end up having to pay for things totally outside of their control if they accept absolute liability in a loan agreement.

There is no technical legal or insurance definition of absolute liability, so it could all come down to what a lawyer can argue in court.

R&I: How can museums protect themselves?

RN: Museums could have many millions of dollars at risk if they put on a high-profile show, and most won’t have the financial capacity to take that on. Before signing any loan agreement, they should contact their brokers and insurers to verify their coverage and limits and identify any gaps between the liability they are being asked to accept, what insurance coverage they have in place and what amount of financial risk they are willing to shoulder.

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Because each loan agreement is different, every one deserves a careful and detailed review. I see two to three loan agreements in a week, and I’ll pick apart each one with a fine-toothed comb and compare the contract with the museum’s insurance policies. Then I’ll see if there’s any additional coverage we can provide to close the liability gap.

At Ironshore, we’re lucky to have a flat management structure, so I can easily walk down to see our terrorism or political risk underwriter to determine if there are some terms and conditions he can offer for our clients. I can quickly find out if there’s extra coverage and capacity we can offer. Most of the time, we can help museums fulfill the obligations that the lender is asking them to accept by crafting bespoke solutions.

*Please visit www.ironshore.com for all disclaimers.

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

The risk manager for Boyd Gaming Corp. says curiosity keeps him engaged, and continual education will be the key to managing emerging risks.
By: | May 1, 2018 • 4 min read

R&I: What was your first job?

I was trained as an accountant, worked in public accounting and became a CPA. Being comfortable with numbers is helpful in my current role, and obviously, the language of business is financial statements, so it helps.

R&I: How did you come to work in risk management?

Working in finance in the corporate environment included the review of budgets and the analysis of business expenses. I quickly found the area of benefits and insurance — and how “accepting risk” impacted those expenses — to be fascinating. I asked a lot of questions. Be careful what you ask for — I soon found myself responsible for those insurance areas and haven’t looked back!

R&I: What is the risk management community doing right?

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I have found the risk management community to be a close-knit group, whether that’s industry professionals, risk managers with other companies or support organizations like RIMS and other regional groups. The expertise of the carriers and specialty vendors to develop new products and programs, along with the appropriate education, will continue to be of key importance to companies going forward.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

As I’m sure many in the insurance field would agree, Hurricanes Katrina and Rita in 2005 changed our world and our industry. It was a particularly intense time and certainly a baptism by fire for people like me who were relatively new to the industry. This event clearly accelerated the switch to the acceptance of more risk, which impacted mitigation strategies and programs.

Bob Berglund, vice president, benefits and insurance, Boyd Gaming Corp.

R&I: What emerging commercial risk most concerns you?

The fast-paced threat that cyber security represents today. Our company, like so many companies, is reliant upon computers, software and IT expertise in our everyday existence. This new risk has forged an even stronger relationship between risk management and our IT department as we work together to address this growing threat.

Additionally, the shooting event in Las Vegas in 2017 will have an enduring impact on firms that host large gatherings and arena-style events all over the world, and our company is no exception.

R&I: What insurance carrier do you have the highest opinion of?

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With the various types of insurance programs we employ, I have been fortunate to work with most of the large national and international carriers — all of whom employ talented people with a vast array of resources.

R&I:  How much business do you do direct versus going through a broker?

We use brokers for many of our professional coverages, such as property, casualty, D&O and cyber. We are self-insured under our health plans, with close to 25,000 members. We tend to manage those programs internally and utilize direct relationships with carriers and specialty vendors to tailor a plan that works best for team members.

R&I: Who is your mentor and why?

I have been fortunate to have worked alongside some smart and insightful people during my career. A key piece of advice, said in many different ways, has served me well. Simply stated: “Seek to understand before being understood.”

What this has meant to me is try everything you can to learn about something, new or old. After you have gained this knowledge, you can begin to access and maybe suggest changes or adjustments. Being curious has always been a personal enjoyment for me in business, and I have found people are more than willing to lend a hand, offer information and advice — you just need to ask. Building those alliances and foundations of knowledge on a subject matter makes tackling the future more exciting and fruitful.

R&I: What have you accomplished that you are proudest of?

Our benefit health plan is much more than handing out an insurance card at the beginning of the year. We encourage our team members and their families to learn about their personal health, get engaged in a variety of health and wellness programs and try to live life in the healthiest possible way. The result of that is literally hundreds of testimonials from our members every year on how they have lost weight, changed their lifestyle and gotten off medications. It is extremely rewarding and is a testament to [our] close-knit corporate culture.

R&I: What’s the best restaurant you’ve ever eaten at?

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Some will remember the volcano eruption in Iceland in spring of 2010. I was just finishing a week of meetings in London with Lloyd’s syndicates related to our property insurance placement when the airspace in England and most of northern Europe was shut down — no airplanes in or out! Flights were ultimately canceled for the following five days. Therefore, with a few other stranded visitors like myself, we experimented and tried out new restaurants every day until we could leave. It was a very interesting time!

R&I: What is the riskiest activity you ever engaged in?

I am originally from Canada, and I played ice hockey from the time I was four years old up until quite recently. Too many surgeries sadly forced my recent retirement.

R&I: What do your friends and family think you do?

That’s a funny one … I am a CPA working in the casino industry, doing insurance and risk management, so neighbors and acquaintances think I either do tax returns or they think I’m a blackjack dealer at the casino!




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]