Engineering new solutions for complex losses

April 5, 2023

An ornate sculpture of a woman.
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The spate of activist attacks on fine art in major European museums last year may have quieted, but the vandalism reminds us that even the most fragile objects of history are constantly exposed to threat. Sedgwick is well positioned to help reduce such risks, and provide financial valuation of items and costing of incidents when damage is discovered.

Fortunately, the activists who attacked Van Gogh’s “Sunflowers” in October and the Mona Lisa in May never reached the actual canvases of the works, as both are protected behind glass. Only the frame of “Sunflowers” was slightly damaged.

It may come as a surprise that acts of vandalism on museum artworks are not uncommon, just rarely publicized. As we wrote at the time of the “Sunflowers” incident, it can be difficult to quantify the number of loss events or extent of damage because the national museums are often the insurers of their own collections, and so these acts go unreported in the public sphere.

Similarly, trends in the property arena point to loss events unfolding at the high and low end of the market, whose agents operate hidden from view—a network of literal movers and shakers whose identities may be unknown but whose actions are leaving a mark.

Where are major losses occurring?

At the high end, commissioned theft is on the rise. The wealthy want artwork that isn’t for sale, so they commission someone to get it for them. These loss events are not unlike the art heists you see in movies, although they can occur on a smaller scale (and presumably with much less drama).

Since most museum artworks are protected under government indemnity—they’re simply too valuable to be insured—these loss events will be reported with the utmost discretion; the public is unlikely to know the work has even gone missing. Once the work has been removed, it can reside in a number of protected locations indefinitely, like on a superyacht in international waters—making it next to impossible to locate.

At the other end of the spectrum—in fact, very often at street level—are sending losses. Processed for both the commercial and residential markets, these are the claims Sedgwick’s property major and complex loss teams see the most of. Sending losses can take the form of damaged delivered goods or items lost en route to their intended recipient.

With work-from-home now the new normal, the pandemic-era spike in home deliveries is holding steady. It makes sense that such demand, spurred on by carrier promises of two-day (sometimes same-day) delivery, could result in occasional losses. But when one considers the majority of these deliveries are fulfilled by humans with limited energy reserves, who are navigating dense urban environments by truck and on foot over long shifts—well, losses seem almost inevitable.

What are the solutions?

From a claims intake perspective, it’s difficult to engineer new solutions for the above losses—the damage is done. A solution will be proposed once the claim has occurred, after the adjuster has completed their assessment and identified how best to help the customer.

It can be useful, however, to think along the lines of preventative measures that can be applied to a situation or working conditions to help minimize the potential for loss events. Call it reverse-engineering solutions for complex losses.

Creating awareness of potential risk exposures and asset vulnerability may stop a potential loss event from escalating, or stem it completely. For example, insurers are unlikely to favor a claim for stolen artwork with no formal security in place. (We do know museums are implementing more security measures these days, including increased use of technology like remote-accessible cameras; the same applies to high-net-worth individuals in their homes.) A pre-risk survey can take into account the number of security guards in proximity to the artwork. If the work is to be featured in a one-night event or special exhibit, perhaps the presence of a Sedgwick representative on-site is the most strategic solution for loss control.

Sending losses typically have a clearer throughline between loss cause and effect, especially when the primary claim is mishandling. Busy schedules make it tricky to be available when a package arrives, but this is one solution that package being thrown at a closed door. Another consideration is dialogue with insurers about the risk language in their loss policies and how it’s written. Perhaps emphasis needs to be placed on mishandling—that is, the risk on the driver or courier side of the event.

Reframing loss as interconnected

Zooming out from these situational approaches to property loss prevention, we get a sense of the interconnected nature of loss events and what makes them so complex. Attributing a mishandled delivery to an overworked driver is to raise concerns about a driver shortage, which incorporates themes we see currently in supply chain, specifically the freight industry. Which problem to solve first?

Globally, a lack of trained staff will continue to do more harm than good for businesses, their customers, and those who experience loss events. Driving a truck not an easy job; being underpaid for it is less than motivational. Now, let’s assume the truck is loaded with high-value items. For this driver, it quickly becomes clear just how many steps and points along their journey are required to pull the delivery off without a hitch—the pressure is on. Not every crew is equipped to handle artwork. Not every art handler can drive the truck.

For those pieces of history not protected under glass, determining risk exposures is key to preservation. It is possible to solve for a range of property loss types—museum art being stolen, packages being thrown at doors—if one connects the dots between personnel, policy and presence of mind.

Tags: Fine art, Loss, loss control, loss prevention, Major + complex loss, major and complex loss