Latin American art boom fuels need for cover
In May 2016, Eduardo Costantini, the Argentine tycoon and founder of the Museum of Latin American Art of Buenos Aires (MALBA) bought a picture by Diego Rivera, ‘Baile en Tehuantepec’, for $15.7 million – a world record price for any Latin American work of art. It came just two weeks after a painting by Frida Kahlo – Rivera’s wife – fetched $8 million, setting a previous world record.
That a new sale record was set and then smashed so quickly is proof of the Latin American art boom. Today, the region boasts a growing number of renowned art galleries, from Mexico’s Museo Jumex and Brazil’s Inhotim to Montevideo’s Espacio de Arte Contemporáneo and Buenos Aires’ MALBA, which host both national and international exhibitions. Several of the region’s artists – such as Colombia’s Fernando Botero, Brazil’s Vik Muniz and Beatriz Milhazes, Venezuela’s Carlos Cruz-Diez and Cuba’s Tómas Sánchez – are now hot property, commanding high prices for their work from collectors from across the globe.
In 2015, Latin American art auction sales reached their highest level since the global financial crash in 2008, according to the Deloitte Art and Finance Report. Despite its economic difficulties and political turbulence, just over half of the art galleries in Brazil– the region’s biggest art market – surveyed by Latitude in its 2015 report on the country’s contemporary art market reported a growth in revenue and an increase in the asking price of artworks for sale.
The interest isn’t only from rich, foreign art buyers. Nearly three-quarters of Brazilian galleries’ revenue came from domestic private collectors, according to Latitude – an indication of the increasing interest in owning art among wealthy Brazilians. There’s a similar picture elsewhere in the region: Venezuela, Nicaragua, Uruguay and Cuba all have fast-growing art markets.
The number of art fairs now being held across the region is extra proof of the increasing interest in art in the region. Before, apart from Art Basel Miami Beach there used to be just a handful of events across Latin America. Today, almost every country has its own art fair. For example, Colombia and Chile both now host international art fairs every October, which have become fixtures in the art world calendar and which attract visitors from across the globe.
Growing demand for specialist protection
The growing fashion for acquiring art has been accompanied by a growing interest in protecting it. “We’re seeing an increasing awareness of fine art insurance and a growing interest in buying cover,” says Marigaby Mainero, fine art underwriter for Hiscox MGA, based in Miami.
Local insurers are increasingly being asked to insure high-value collections. But many of them lack the specialist knowledge required, so without a partner with the experience, expertise and appetite to help them underwrite this fast growing, but complicated line of business, these opportunities will pass them by.
Hiscox, which is one of the world’s leading art insurers as well as an avid collector of contemporary art, offers reinsurance cover to enable companies to provide standalone policies that protect valuable collections, as well as art dealers and visiting exhibitions at public galleries.
Region’s love of art set to grow
With the number of very wealthy people in Latin America increasing, so too has an interest in buying art. In 2015, there were 400,000 in the region, up 7% – higher than the global average, according to the Boston Capital Group Global Wealth Report.
Art is seen as a good investment – over three-quarters of wealth managers surveyed for the Deloitte report think art should be included as part of the investment portfolio options they offer to clients.
The interest in protecting their investments is also bound to rise. Although many local insurers offer some art insurance as part of their standard homeowners policies, the cover is limited. Those companies that offer their high-net-worth clients better protection for their newly acquired artworks could steal a march on their rivals at a time when the number of millionaires in the region is growing.
Nearly three-quarters of Brazilian galleries’ revenue came from domestic private collectors, according to Latitude – an indication of the increasing interest in owning art among wealthy Brazilians.
Hiscox’s art cover offers a host of add-ons that enable its insurer clients to provide protection that goes above and beyond the standard art cover common in the market. “Whereas many local insurers might only cover the cost of restoring a damaged artwork, our reinsurance also covers the loss of value it suffers,” says Mainero. It will also cover theft or damaged committed by the artwork owner’s employees, unlike other companies. “So, buying Hiscox art reinsurance enables our insurer clients to enhance the household cover they offer to their VIP clients.”
Dealing with fine art claims can also be a delicate and complex process. Finding the right conservator capable of restoring a client’s cherished possession back to its former glory isn’t easy. But, over the course of more than 40 years spent insuring art Hiscox has built up a worldwide network of experts, as well as a wealth of experience in how to settle claims quickly, discretely and to the art owner’s satisfaction.
With the Latin American art scene now well established, art insurance is set to become a growing niche. "The Latin American art market is becoming more sophisticated,” says Mainero. “There’s a growing desire to own art, which has created a thriving market in works by local artists. With an increasing proportion of their wealth tied up in art there’s an increasing interest from collectors in protecting their collections by finding the right insurance coverage."