Ladies and gentlemen, thank you for your warm welcome.
I am very pleased to be here. We Italians like to think that a love of art and beauty is an intrinsic part of our cultural heritage. We have the Italian Masters: Botticelli, Caravaggio, Leonardo, Michelangelo, Raffaello and Tiziano. And, yet, here in Spain, I find myself reminded of Gaudi, Picasso, Kahlo, Miro, El Greco, Dali, Velazquez and Goya. When it comes to fine art and wonderful artists, we Italians clearly don’t have it all our own way. So I have decided not to be artistically competitive today – I only compete when I can be sure of winning!
An appreciation of the beautiful and precious should, in any case, be something that unites us, rather than divides us. It’s something that I know everyone here shares. The other thing we share is our luck in being here today – for the first time in its history, the IFASIC booking office had to close early in the face of overwhelming demand.
Now, I first heard about this organisation when my colleague Alexis Fontein asked me to support the sponsorship of the so called “diamond dinner” for a small group of people back in 2005. Today, just a few years down the road, you are here holding an event with more than 250 people. This is amazing, well done – Lloyd’s is delighted to have the opportunity to sponsor it.
Is this rise in interest in specie insurance a sign of the times? In a tough economic climate both the temptation to commit specie theft and fraud, and the resources put into doing so, tend to rise. Earlier this year the FBI warned that theft and fraud in fine art and antiquities was on the rise – costing around $6bn dollars a year.
Meeting this challenge takes knowledge, innovation and expertise – all of which Lloyd’s has in abundance.
And, of course, having a couple of hundred years of experience never hurts. It was Lloyd’s underwriter Cuthbert Heath who, together with a diamond merchant’s assistant, invented Jeweller’s block in the 1880’s. It was a Lloyd’s insurer, Hiscox, who developed ‘nail to nail’ fine art insurance – covering art in transit from one hanging to the next and pretty much all points in between. Today, Lloyd’s remains the first port of call for those with the highest, the rarest and the most complex specie risks.
Lloyd’s Underwriters are the experts. They need to be. Across the globe, art, antiques and fine jewellery are on the move as never before.
Galleries from New York to Europe are trying to out-do each other to see who can deliver the latest ‘blockbuster’ exhibition for a public hungry for works by even bigger names.
At the same time, as investment yields fall, the new super-rich are increasingly looking to specie as safe investments in volatile times. But, for many, their knowledge of art is not matched by an awareness of the risks. An insurance survey last month estimates that nearly 40% of US private collectors, for example, failed to insure all their collections.
Volatile markets are also driving the move to buy gold and diamonds as investors try to find new ways of protecting their wealth. And, while it’s likely we have already seen the gold price peak, it will inevitably be used as a hedge for as long as global economic uncertainty remains – and the odds on how long that will be are growing every day.
With the additional £75 bn of Quantitative Easing recently announced by the UK’s Bank of England and the Federal Reserve’s $400 bn stimulus package unveiled in September, it’s safe to assume that yields will fall further still.
The need to find safe investments can only grow, while the number of ‘safe’ investment options remains static. Investing in art, sculpture, precious metals and stones becomes an even safer bet where - and if - there is the right insurance to protect it.
These, then, are the times when we must refocus our efforts on promoting Lloyd’s specialist specie knowledge and experience.
And, particularly for these new potential insureds, we also need to recognise the psychological aspect of this kind of business. Specie business is not quite like any other kind of insurance. Aside from Kidnap and Ransom products, it is probably the most fiduciary relationship we have with any of our clients. Even more so than most classes, in specie the bottom line is mutual trust.
Collectors can be wary and investors nervous. Insuring art is a complex business on many levels, not all of them purely technical. We need to demonstrate that we know our stuff, that we are safe and that – importantly – we have a track record of adding extra value.
That’s where our Underwriters’ experience really counts. When a major gold minting operation discovered it had suddenly and inexplicably lost more than USD $23mn, Lloyd’s Underwriters felt there was more to this sudden loss than met the eye. Their forensic experts uncovered a systematic pattern of loss over time and were able to show the mint how to change their smelting, weighing and accounting processes to stop such losses in the future.
Lloyd’s expertise means we can provide the most relevant and up to date security advice, make recommendations about transport and storage and add additional levels of confidence at every stage of the process from pricing policies to paying claims – and more.
So when a security courier was hit by the UK’s biggest ever cash heist – £53mn – Lloyd’s underwriters did more than just investigate swiftly and pay out promptly. Together with the police, they also put up a record reward which led to the recovery of around £20mn and some very high profile convictions. Lloyd’s underwriters are tenacious too – we’re still working with law enforcement agencies across a number of jurisdictions in several countries to recover the rest of the stolen money.
It’s not the first time our international presence has given our clients an advantage. Lloyd’s has offices in all the specie hubs in the world - South Africa, Rotterdam, Tel Aviv, Antwerp, Geneva and New York. Our specie community is truly international.
And, of course, we are safe. In a year when the Irish insurer Quinn is taken over, the Co-operative Group gives up selling insurance after 125 years and institutions like Groupama are unexpectedly downgraded, Lloyd’s stands for security.
Our interim results showed losses after an exceptional year of natural catastrophes, yes, but these results compared favourably with our colleagues in the Bermudan and American insurance industries.
Our ability to pay claims is unquestioned and the strength of our reputation and financial position has been confirmed again this year by our A+ and A ratings with a stable outlook. In these uncertain times for the industry, other insurers may be acquired, or merged, or just throw in the towel - but Lloyd’s isn’t going anywhere.
We’ve been around for over 300 years, and in that time the Lloyd’s market has been at the forefront of insuring and protecting fine art – finding solutions to the wide range of challenges that buying, storing and transporting paintings, sculpture and installations always bring.
We have been able to attract the finest underwriting specialists in this field - some of whom are even artists themselves. This very powerful combination of our three hundred year reputation, international reach, financial security, talent and passion adds up to the unique service we offer our clients.
When it comes to specie, Lloyd’s has always been the home of passionate expertise across the centuries. As we look to the future, I know I speak for the market as a whole when I say I’m confident we always will be.
Thank you.
