Sept. 11 puts art world in insurance bind

Costs of covering works against terrorism threaten to curtail exhibits in U.S.

February 16, 2003|By BLOOMBERG NEWS

NEW YORK - To insure 132 artworks in its Matisse Picasso exhibition, New York's Museum of Modern Art received the maximum $500 million in coverage the U.S. government provides. It wasn't enough.

The show, which opened Thursday, has pieces borrowed from 45 museums and collectors in nine countries. The museum had to convince lenders that the government's coverage, plus an unspecified amount it got from insurance companies, would be sufficient, director Glenn Lowry said. He wouldn't disclose the value of the show's collection. One picture, Pablo Picasso's 1955 Femmes d'Algers (Toile O), sold for $31.9 million at auction six years ago.

Insurance costs of international exhibits at U.S. museums have more than doubled since the Sept. 11 attacks, directors and insurers said. Higher premiums and terrorism coverage may lead to fewer and smaller exhibits and jeopardize the blockbusters that have drawn 500,000 or more visitors, museum officials said.

"The public will be deprived in the long run of access to many objects," said Ed Able, president of the American Association of Museums, which represents about 1,300 fine arts institutions.

Insurers dropped terrorism coverage from art policies in the United States after Sept. 11, citing cost and greater risk of attacks on institutions or cities. Requests for federal coverage through the National Endowment for the Arts increased to $9.8 billion for 41 U.S. museum exhibitions last year from $3.3 billion for 19 shows in 2000, the government agency's statistics show.

"Insurance was always a complicated technical problem," Lowry said. "Now it's costing two or three times more and taking two and three times the effort."

The federal government is permitted under a 1998 law to carry a maximum of $5 billion of risk at one time for art. The American Association of Museum Directors and other arts groups support legislation that would raise the limit to $8 billion.

"The cost of terrorism insurance post-Sept. 11 is a huge problem for museums," Alice M. Whelihan, the National Endowment's indemnity administrator, said in a statement. She said the agency had to distribute coverage within its $5 billion ceiling.

The cost of insuring art as it traveled to the United States from Europe has risen to about a tenth of a percent of the work's value, double the cost in 1999, said Daniel Wood, fine arts underwriter for Hiscox PLC, an underwriting syndicate of Lloyd's of London. Coverage for art on exhibit over the same time rose to 0.01 percent of a work's value each month from 0.0075 percent a month.

Under that formula, one-way insurance for shipping a $20 million painting would cost $20,000 today, up from $10,000 in 1999, Wood said. A month's exhibition would cost $2,000 for insurance alone, compared with $1,500 four years ago.

Insurance costs for the Metropolitan Museum of Art in New York were twice as much for its current exhibit, Leonardo da Vinci, Master Draftsman, as before Sept. 11, said David McKinney, the museum's president. The show has 120 drawings from 21 international art museums and Queen Elizabeth II.

"The primary change has been the concern over terrorism insurance and the costs of it," McKinney said.

For Matisse Picasso, the Museum of Modern Art sold more than 65,000 tickets in advance of the exhibit. The $20 price, $8 more than the $12 general admission, covers the cost of added insurance and other exhibition expenses. Lowry said insurance costs may force museums to raise ticket prices for future shows.

Matisse Picasso attracted 580,000 visitors at the Musee National d'Art Moderne/Centre Georges Pompidou in Paris, in a show that ran from Sept. 22, 2002, through Jan. 6. The show sold 500,000 tickets at the Tate Modern in London from May 11 to Aug. 18 last year. In New York, the exhibit runs through May 19 at the museum's temporary site in Long Island City, Queens.

The crowds drawn to blockbuster exhibitions give a boost to local economies, museum directors say. The Philadelphia Museum of Art's Cezanne show in 1996, for example, attracted 548,741 visitors during its 14-week run and contributed $86.5 million to Philadelphia's economy, the museum estimates.

At the same time, cultural institutions are receiving less aid from corporate donors, foundations and individuals. Museum officials say that budget cuts also have reduced state and local arts funding.

Museums have found they can't cut corners on insurance coverage. The Minneapolis Institute of Arts, for instance, will open an exhibit in June of 110 oil paintings and 40 watercolors from the British and French Age of Romanticism, 1820 to 1840. The show, on display now at the Tate Britain museum in London, consists of works borrowed from 87 lenders in the United States and Europe.

European lenders didn't want to ship works to the United States until the museum confirmed the art was covered, said Patrick Noon, the Minneapolis Institute's curator of paintings.

"Terrorism was never an issue before," he said. "If the lender needs additional insurance, you just don't borrow the object."

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