Q&A: Art Theft and Its Impact on the Insurance Industry

By | April 11, 2017

Bill Anderson, a managing partner of Brooklyn, New York-based Art Guard, recently spoke with Insurance Journal about issues related to insurance and artwork. Anderson has observed that roughly more than 50% of art thefts occur at private homes, and with this in mind, he spoke about best practices for security within private homes, as well as museums, that house art collections. He also discussed strategies for preventing thefts before they occur and the process for filing an insurance claim after a theft.

Anderson also explained Art Guard and the technology behind it. Art Guard was founded in 2006 in response to increases in art valuations and a corresponding increase in grab and run theft, according to the company’s website. After 18 months of user experience and installations in more than 50 museums, hotels, libraries, galleries and private collector homes, Art Guard has brought MAP (magnetic asset protection) to market to secure any stationary asset of monetary, historic or intrinsic value, the website states.

It currently uses MAP systems to alarm each piece of artwork in a home or gallery individually to alert against any potential theft. Going forward, Art Guard is looking at the home automation market and internet of things technologies for future development, its website states.

Insurance Journal: Can you give a brief overview of who you are and what you do?

It's in everybody's interest to stop looking the other way and wake up to the fact that this is a real problem.

Bill Anderson: I’m a Managing Partner of Art Guard. We’re based in Brooklyn, and Art Guard is a creator and marketer of technologies for protecting art and valuable assets. My background is part marketing and part technology. I was in publishing for a number of years, and then in solar energy and some other energy production technologies. So this melds my experience very nicely in bringing this to market.

IJ: Could you talk about what homeowners can do to prevent art thefts and what challenges they might run into?

Anderson: The figure that the industry is probably not widely aware of is the fact that only 17 percent of homes in this country do have intrusion of perimeter security. If you consider the number of people or homes that have collections over a million dollars, let’s say, that’s probably upward of 200,000. I suspect that every one of those homes has some sort of intrusion or perimeter security. They may have some peripherals, like cameras and other things in the home as well, but the problem is getting those people to use the system. The little secret in this industry is that a lot of people have systems – expensive sophisticated systems – but they either don’t use them on a regular basis or they don’t even use them at all. They may have monitoring systems or contracts that they let lapse within the first or second year. A lot of these homes are essentially unprotected. The trick is making sure that they have something on the objects that they are attempting to protect. Most homes, whether they have a system or not, will turn that system off 16 hours of the day to allow traffic in the home. That could be guests, staff, workers or even family. It’s at those times that the objects in the home are completely unprotected. The goal is to have some object‑specific protection on objects and have that on 24/7. Those are the steps that people should take in considering how to protect their works.

IJ: Are there any challenges that gallery owners face that differ from home owners?

Anderson: I think the galleries are a bit different. I’m sure you’ve been into many galleries where, if you walk in, whoever’s tending to the gallery is going to be in the back talking on the phone or on a computer or talking to a client and not paying attention to the rest of the room. There are very few galleries that have guards, so it’s really up to those one or two people that are in the gallery at the time to know what’s going on. Because the shows come and go on a frequent basis, they often don’t have sophisticated means of protection. The challenge for galleries is really grab‑and‑run theft. It’s preventing someone from just walking in, grabbing something near the door and walking out. That’s probably the biggest difference between that and a home.

IJ: If unfortunately an art theft occurs at a home or a gallery, what are some of the main steps that you should take to follow through with that?

Anderson: The first obvious step is to report it. This is an industry that’s notoriously secretive, and for various reasons people don’t report art theft. It could be their privacy. It could be embarrassment. It could be for fraud because they don’t want the IRS to know. The first step is to bring your documentation up to speed and then report it, if there is a theft. If it’s over a certain amount, the FBI is interested, and so are organizations like Art Loss Recovery and Art Recovery International. One of the problems is that a lot of people don’t have a great deal of confidence in the authorities because there’s only one police department in this country with any art theft experience. You just hope that they have the skill to be able to follow up, because the art can be gone in a matter of days and with very unappealing fates after that.

IJ: Are there any challenges the insurance industry has faced with art theft in the past?

Anderson: The biggest challenge to the insurance industry is its inability to mandate that its clients do something. This industry is driven by the ability to make money. It often turns on pennies in terms of retaining clients and getting new clients, so it’s a very delicate dance that insurers have to make in that regard. The other problem is, if there is a theft, there can be problems of litigation. For instance, if a painting is stolen and a payout is made, and that piece comes back into the market years later with an extraordinarily higher value, then there’s a good chance of a lawsuit. The hands of the industry have somewhat been tied in that regard.

IJ: What is the average cost of an insurance claim related to art theft?

Anderson: I would suspect it’s under $50,000, and that could imply all kinds of assets besides art which are extremely vulnerable to theft and which we can uniquely protect – jewelry, antiques, collectibles, memorabilia, wine, firearms, wall safes and even a car in a garage.

IJ: Why is now the right time for a product like Art Guard, and what sets it apart from traditional security systems?

Anderson: First of all, I mentioned the gallery. We came into this market with a product called Safe Hook. It was specifically designed for galleries, because we had been talking to a gallery owner that informed us that many galleries still use marbles behind the frames. This was 10 years ago. I go into meetings, and people still nod their heads over that. This was a product that is standalone, battery‑operated and designed to protect hanging work from grab‑and‑run theft. Then, we got into our MAP technology, which is the magnetic asset protection and is much more sophisticated. The number one distinction with that product is the ability to protect almost any stationary object, from a piece of jewelry sitting on a desk to an outdoor sculpture. The implication there is also, since we are using a different technology, that it’s safer for the asset since what we have is a sensor and a rare‑earth magnet, and what is applied to the work is that magnet. Batteries don’t come in contact with the work, and there’s a smaller area of contact for the protective device. It’s much more flexible in terms of its application. Depending on how you use the sensor, the system is very flexible. It’s also very discreet, which has a number of advantages and ease of application, affordability and protection from being compromised.

IJ: Is there anything else you want to add about how the product works or some of the technology that’s involved?

Anderson: The best way to describe this is that it’s a sensor that detects the movement of a tiny rare‑earth magnet. Once that magnet is placed on the asset and the sensor on a surface, either behind the painting or under a supporting surface, and that’s enrolled in a control panel, any movement of either the sensor or the magnet will trigger a wireless alert to the control panel setting off whatever response you want. It could be completely customized from alarms to calls to the police or an outside response mechanism or even a cellphone. You can manage the whole operation from a cellphone and get your alerts there.

IJ: How have you seen Art Guard benefiting the insurance industry in particular?

Anderson: We’re fairly early in the game with that, so we don’t have a lot of measurable results. I do know that where insurers have recommended the product to homeowners or to museums, they have been very happy with the system. I think that rebounds to the insurer, certainly, in the ability to retain that client. I think that where museums have also installed the product, and we have made their insurer aware of the fact that the system was in the museum or in a home, that they’ve been quite pleased to know that. Whatever that leads to, we don’t know, but there has been a very favorable response in that regard.

IJ: Is Art Guard available across the US?

Anderson: It is across North America, actually, from Canada to Mexico, either in traditional systems or our MAP system. We expect to be moving to Europe and internationally later this year.

IJ: What is the cost of getting it installed in your home or your gallery?

Bill Anderson

Anderson: It really depends on what the client wants. If they have a system that is in the home, normally the sensors can be integrated directly into that by the installer, although art security consultants would recommend that it be on a separate system, which could be a traditional system as well. If, let’s say, they had a Honeywell system, they could put another Honeywell control panel there. They could operate side by side, but it’s on a separate system and on 24/7. The other option is then to use the MAP system, which is a totally dedicated system – plug‑and‑play, pre‑enrolled sensors. The flexibility on that is to be able to place it anywhere in the home. That plugs directly into a router, or it operates on cellular or even on WiFi so it can be moved anywhere in a home or in a small facility.

IJ: Is there anything we didn’t talk about or anything that you wanted to add?

Anderson: I think that, as we all know, the market continues to expand. Prices continue to rise, and logically, there’s going to be more theft and certainly more fraud, which is probably the number one problem in the market. That is all a threat to our enjoyment of the products or the art. I think it’s in everybody’s interest to stop looking the other way and wake up to the fact that this is a real problem and it’s to everybody’s benefit.

Check out Anderson’s full vodcast interview with Insurance Journal‘s Elizabeth Blosfield.

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