Insurer Cautious with Claims as Fraud Rises

Well, I am backing to talking about art fraud. Christina Ruiz of the Art Newspaper has a good article on insurance companies being more cautious in the claims process because of fraudulent works. The extra caution could certainly help the appraisal profession.

I recently worked on a damage claim where the insurance company was concerned about a value stated by the claimant on a damage claim. My investigation proved the claim was legitimate, but there were legitimate reasons for additional checking, verification and substantiating. The insurance company retained my services to check them out. With my consultation and information the insurance company negotiated a fair and equitable settlement with the claimant. The article by Ruiz pretty much covers exactly what I did about two moths ago.

Appraisers should take the time to read the Art Newspaper article.

Ruiz starts out her report with:

The insurance industry is on red alert. The number of fraudulent claims is rising rapidly and experts predict they will continue to increase until the economic situation improves. According to the Association of British Insurers (ABI), in 2008 there was a 17% rise in fraudulent claims compared with the previous year. This amounted to 2,000 dishonest claims made in Britain every week. The total value of these in 2008 was £730m—30% up on 2007.

Ruiz Continues:

One of the most ambitious types of art fraud involves attempts to secure insurance for minor works that are presented as masterpieces with huge valuations, usually in excess of £20m. According to Filippo Guerrini-Maraldi, a director with R.K. Harrison Insurance Brokers Ltd, “these types of requests often happen during the month of August when most heads of department are on holiday. The fraudsters hope that some young, keen executive will take their call and will want to try and impress his bosses on their return by achieving their budget targets for the year.”

To the experienced insurer these frauds, known as “money for old rope” claims, are easy to spot: typically an individual will say he owns an old master painting, or several, by a famous artist such as Leonardo. The works are inevitably accompanied by voluminous documentation that includes authentication and valuations from obscure specialists. The aim is to insure the art for millions and then stage its theft or, using the insurance policy, obtain a bank loan with the art as collateral. “If the number of Leonardos presented to us were real, Leonardo would still be alive and painting today,” says Nicholson.

To read the full Art Newspaper article, click HERE.