2017 Power Broker

Fine Arts

Making It Easy

Kristina Marcigliano
Senior Account Executive
DeWitt Stern, New York

Susan Jaffe, director of Guernsey’s auction house, may deal with a $10 million collection of guitars one day or a $25 million glass piece by Picasso or rare star rubies on other days.

Regardless of the type of valuable — or its storage and transportation needs — she counts on Kristina Marcigliano to give her the best advice and procure the best coverage.

“We are constantly hitting her with quite a range of needs and she’s always been very responsive,” said Jaffe. “Each collection that we handle has a different set of requirements.”

Marcigliano helped another auction house combine insurance programs during a merger to ensure there were no gaps. In the end, she secured higher limits at a lower premium for the merged company, and developed a jewelry insurance solution for consigned items. A director at the company praised Marcigliano and her colleagues for making the “process smooth and easy. There was no hassle.”

Marcigliano makes “the crazy insurance world a lot simpler than it actually is.”

Auction houses have many complex issues dealing with valuation, security and transport, said Kenneth McKenna, executive vice president and CFO of Doyle Auction House.

“We are not exactly your typical situation,” he said. “Kristina is very creative.”

This year, she created a hybrid policy that covers fine art items, furniture, jewelry and precious metals, including very high transit limits for jewelry coverage that allows the auction house more flexibility when pieces have to be transported.

Overcoming Challenges

Lynn Marcin
Senior Vice President
Aon, Washington, D.C.

In negotiating lender loan agreements, galleries have a mounting problem with “absolute liability creeping into contracts [regardless of insurance coverage],” said Joan Elisabeth Reid, chief registrar of Walters Art Museum. “It’s a major issue.”

Lynn Marcin at Aon subsidiary Huntington T. Block provided the museum with the contract language needed to successfully negotiate a very complex exhibition. “She’s there for everything we need.” said Reid.

“Some lenders make outlandish requests now, and Lynn works so hard to figure out what is a viable request and what we should absolutely not agree to,” said Patty Decoster, head of collections management and registration at Kimbell Art Museum. “[Marcin] is really good at knowing when a line can be crossed and when we should not agree to it, at getting everything she can for the lender from the underwriter but fabulous at protecting the Kimbell from going too far.”

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“When you are trying to wrangle 50 lenders and shipping venues, and determine coverage needs in transit and on premises, and transit to the next institution, it can be nerve-wracking,” said Melanie Harwood, senior registrar at the Baltimore Museum of Art. “Lynn is good at being calm and saying, ‘This is what you can do,’ “ and coming up with the best solution possible.

“We do nothing but give her challenges. That’s our job and she fields them very well,” Harwood said.

A Mentor to the Art World

Deborah Peak
Vice President
Aon, Washington, D.C.

Because of its active lending program to museums in the United States and around the world, the Nelson-Atkins Museum of Art depends on Deborah Peak at Aon subsidiary Huntington T. Block to review the various foreign insurance policies and foreign government indemnity contracts.

It’s a complicated process, especially when the museum deals with different museums in different countries on different projects — all at the same time.

“That can be a little tricky,” said Julie Mattsson, exhibitions registrar at the museum. “Debby has been able to help make that more seamless than it certainly started out to be.”

And not that Mattsson ever forgets when international policy premiums are due, but Peak is always on top of it, and offers to expedite the process at the last minute, she said.

“Sometimes premium costs are pretty high so people don’t want to pay super early, but that means pretty often we get down to the wire,” Mattsson said.

Susan Leidy, deputy director of the Chrysler Museum of Art, said Peak “has been a mentor to many of us. She is absolutely phenomenal. She’s worked with major museums all over the world and she brings that experience to us.

“She’s not prescriptive. She doesn’t say, ‘You have to do this.’ She has a way of educating the client to do the right thing because it benefits everybody. She’s been doing this for a long time in a very low key, solid and professional way. Sometimes that doesn’t get recognized and it should get recognized.”

A Home Run Every Time

Mary Pontillo
Vice President
DeWitt Stern, Charlottesville, Va.

Paris Photo, a prestigious photography collection, was one of the many cultural events that were ordered closed following the terrorist attacks in Paris last year.

Knowing her fine arts clients could one day face a similar situation, Mary Pontillo worked with London to develop event cancellation expense coverage. It’s just one of the ways she works for her clients to expand coverage and stay competitive.

“We have unique art insurance requirements that are not what most people in the world have,” said Sharon Ullman, COO of the Robert Rauschenberg Foundation, who praised Pontillo’s work. Whether it’s shipping 67 containers of artwork to China or protecting a $35 million 191-panel artwork, Pontillo “made sure we were covered from here to there. We just call and say, ‘Here’s a new one for you.’ She makes it easy.”

Arlie Sulka, owner of Lillian Nassau LLC, renowned specialists in original Tiffany Studios lamps, said, “When you get good coverage from someone who is so knowledgeable about the industry and that you trust that much, you just don’t want to let that relationship go. Mary hits a home run every time.”

Added a gallery director, “Mary Pontillo is remarkable and she invested a considerable amount of time going through every page of [our] policy.”

“It’s the driest of subjects but she is very passionate about it,” she said, “And she is passionate about fine arts. That allows her to stand out in the industry.”

Always Available

Anne Rappa
Senior Vice President
Aon, New York

Anne Rappa at Aon subsidiary Huntington T. Block “is always available for my weird questions,” said Bianca Cabrera, registrar at Galerie Lelong.

Fine art insurance is complicated because pieces are “literally moving all over, all of the time, so we always need quick information,” she said. “She’s always willing to talk me through scenarios when we are not quite sure how things may play out.”

Recently, one of the artists associated with the gallery called in a panic because it was the night before the artist had to ship artwork created on a major public commission, and the contract-required insurance had never been procured, she said.

“Anne helped me set that up in a few hours to make sure that the piece was covered,” Cabrera said. “It was a huge, monumental piece, and it wasn’t a little amount of coverage we needed.”

Rappa recently authored a roadmap to help educate university risk managers about the complications involved in identifying, valuing and protecting their fine art and rare book collections. Angela Moss, director, office of risk management at Wayne State University, took advantage of that guidance.

“We never had a fine art policy before,” Moss said. “If we would have had a loss over $10,000, we would have suffered the loss.” The policy covers high-value items without needing to list each one or get appraisals. “Anne is a partner,” she said.

Making a Difference

Casey Wigglesworth
Account Executive
Aon, Washington, D.C.

When doing a $25 million upgrade to a museum, a public sector risk manager realized there were major coverage gaps at an associated facility owned by the public entity but operated by a nonprofit organization.

A dispute over which group was responsible to cover the historic artifacts and other items could not be resolved until Casey Wigglesworth at Aon subsidiary Huntington T. Block came on the scene. She worked with both groups to ensure proper valuation of items and policies to protect them.

“The result was she was able not only to get all parties to work together, which had never worked together, but she was also able to clearly see what each party had to do to get the right cover,” said the public sector risk manager.

Kelsa Coker, treasurer and general manager of Ely Inc., a service provider to museums and galleries, said Wigglesworth is “very responsive to my crazy requests. We are a small business and I look for responsiveness. I need someone to respond almost immediately so I can take care of clients who can be quite needy at times.”

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Regardless of the time or request, Wigglesworth “is just there for me and makes me feel comfortable with what I am offering to my clients. She gives me piece of mind.”

“Casey takes us through what needs to be done to make sure we are properly insured,” said Marilyn Sohi, head registrar, permanent collection, Madison Museum of Contemporary Art, including being available for questions about security, valuation, shipping and storage.

Finalists:

Blythe Hogan
Director, Global Fine Art Practice
Aon, Atlanta

Emily Weiss
Senior Account Executive
DeWitt Stern, New York

 

More from Risk & Insurance

More from Risk & Insurance

Property

Insurers Take to the Skies

This year’s hurricane season sees the use of drones and other aerial intelligence gathering systems as insurers seek to estimate claims costs.
By: | November 1, 2017 • 6 min read

For Southern communities, current recovery efforts in the wake of Hurricane Harvey will recall the painful devastation of 2005, when Katrina and Wilma struck. But those who look skyward will notice one conspicuous difference this time around: drones.

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Much has changed since Katrina and Wilma, both economically and technologically. The insurance industry evolved as well. Drones and other visual intelligence systems (VIS) are set to play an increasing role in loss assessment, claims handling and underwriting.

Farmers Insurance, which announced in August it launched a fleet of drones to enhance weather-related property damage claim assessment, confirmed it deployed its fleet in the aftermath of Harvey.

“The pent-up demand for drones, particularly from a claims-processing standpoint, has been accumulating for almost two years now,” said George Mathew, CEO of Kespry, Farmers’ drone and aerial intelligence platform provider partner.

“The current wind and hail damage season that we are entering is when many of the insurance carriers are switching from proof of concept work to full production rollout.”

 According to Mathew, Farmers’ fleet focused on wind damage in and around Corpus Christi, Texas, at the time of this writing. “Additional work is already underway in the greater Houston area and will expand in the coming weeks and months,” he added.

No doubt other carriers have fleets in the air. AIG, for example, occupied the forefront of VIS since winning its drone operation license in 2015. It deployed drones to inspections sites in the U.S. and abroad, including stadiums, hotels, office buildings, private homes, construction sites and energy plants.

Claims Response

At present, insurers are primarily using VIS for CAT loss assessment. After a catastrophe, access is often prohibited or impossible. Drones allow access for assessing damage over potentially vast areas in a more cost-effective and time-sensitive manner than sending human inspectors with clipboards and cameras.

“Drones improve risk analysis by providing a more efficient alternative to capturing aerial photos from a sky-view. They allow insurers to rapidly assess the scope of damages and provide access that may not otherwise be available,” explained Chris Luck, national practice leader of Advocacy at JLT Specialty USA.

“The pent-up demand for drones, particularly from a claims-processing standpoint, has been accumulating for almost two years now.” — George Mathew, CEO, Kespry

“In our experience, competitive advantage is gained mostly by claims departments and third-party administrators. Having the capability to provide exact measurements and details from photos taken by drones allows insurers to expedite the claim processing time,” he added.

Indeed, as tech becomes more disruptive, insurers will increasingly seek to take advantage of VIS technologies to help them provide faster, more accurate and more efficient insurance solutions.

Duncan Ellis, U.S. property practice leader, Marsh

One way Farmers is differentiating its drone program is by employing its own FAA-licensed drone operators, who are also Farmers-trained claim representatives.

Keith Daly, E.V.P. and chief claims officer for Farmers Insurance, said when launching the program that this sets Farmers apart from most carriers, who typically engage third-party drone pilots to conduct evaluations.

“In the end, it’s all about the experience for the policyholder who has their claim adjudicated in the most expeditious manner possible,” said Mathew.

“The technology should simply work and just melt away into the background. That’s why we don’t just focus on building an industrial-grade drone, but a complete aerial intelligence platform for — in this case — claims management.”

Insurance Applications

Duncan Ellis, U.S. property practice leader at Marsh, believes that, while currently employed primarily to assess catastrophic damage, VIS will increasingly be employed to inspect standard property damage claims.

However, he admitted that at this stage they are better at identifying binary factors such as the area affected by a peril rather than complex assessments, since VIS cannot look inside structures nor assess their structural integrity.

“If a chemical plant suffers an explosion, it might be difficult to say whether the plant is fully or partially out of operation, for example, which would affect a business interruption claim dramatically.

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“But for simpler assessments, such as identifying how many houses or industrial units have been destroyed by a tornado, or how many rental cars in a lot have suffered hail damage from a storm, a VIS drone could do this easily, and the insurer can calculate its estimated losses from there,” he said.

In addition,VIS possess powerful applications for pre-loss risk assessment and underwriting. The high-end drones used by insurers can capture not just visual images, but mapping heat, moisture or 3D topography, among other variables.

This has clear applications in the assessment and completion of claims, but also in potentially mitigating risk before an event happens, and pricing insurance accordingly.

“VIS and drones will play an increasing underwriting support role as they can help underwriters get a better idea of the risk — a picture tells a thousand words and is so much better than a report,” said Ellis.

VIS images allow underwriters to see risks in real time, and to visually spot risk factors that could get overlooked using traditional checks or even mature visual technologies like satellites. For example, VIS could map thermal hotspots that could signal danger or poor maintenance at a chemical plant.

Chris Luck, national practice leader of Advocacy, JLT Specialty USA

“Risk and underwriting are very natural adjacencies, especially when high risk/high value policies are being underwritten,” said Mathew.

“We are in a transformational moment in insurance where claims processing, risk management and underwriting can be reimagined with entirely new sources of data. The drone just happens to be one of most compelling of those sources.”

Ellis added that drones also could be employed to monitor supplies in the marine, agriculture or oil sectors, for example, to ensure shipments, inventories and supply chains are running uninterrupted.

“However, we’re still mainly seeing insurers using VIS drones for loss assessment and estimates, and it’s not even clear how extensively they are using drones for that purpose at this point,” he noted.

“Insurers are experimenting with this technology, but given that some of the laws around drone use are still developing and restrictions are often placed on using drones [after] a CAT event, the extent to which VIS is being used is not made overly public.”

Drone inspections could raise liability risks of their own, particularly if undertaken in busy spaces in which they could cause human injury.

Privacy issues also are a potential stumbling block, so insurers are dipping their toes into the water carefully.

Risk Improvement

There is no doubt, however, that VIS use will increase among insurers.

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“Although our clients do not have tremendous experience utilizing drones, this technology is beneficial in many ways, from providing security monitoring of their perimeter to loss control inspections of areas that would otherwise require more costly inspections using heavy equipment or climbers,” said Luck.

In other words, drones could help insurance buyers spot weaknesses, mitigate risk and ultimately win more favorable coverage from their insurers.

“Some risks will see pricing and coverage improvements because the information and data provided by drones will put underwriters at ease and reduce uncertainty,” said Ellis.

The flip-side, he noted, is that there will be fewer places to hide for companies with poor risk management that may have been benefiting from underwriters not being able to access the full picture.

Either way, drones will increasingly help insurers differentiate good risks from bad. In time, they may also help insurance buyers differentiate between carriers, too. &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected]