Chelsea Claims Approach $500 Million
Two months after Hurricane Sandy caused severe flooding in many Chelsea galleries, the bill for the art world’s recovery is shaping up to be hefty.
Art collectors of ArtKabinett social network are still seeing many closed galleries in this lower Manhattan neighborhood.
By mid-November, AXA Art Insurance, one of the largest art insurers, estimated that it would be paying out $40 million.
A Reuters report last week quoted industry estimates suggesting that insurance losses for flooded galleries and ruined art may come to as much as $500 million – or the rough equivalent of what the art insurance business takes in each year.
That would amount to the largest loss the art world and its insurers have ever sustained.
Included in this half-billion-dollar total, Reuters reported, is a claim for losses sustained on work by the pop artist Peter Max, pictured here, whose works on paper are said to have been stored in a warehouse that was flooded.
Reuters, quoting unnamed sources, put the claim on Mr. Max’s work at $300 million
Filippo Guerrini-Maraldi, the executive director of fine art at R.K. Harrison, a London-based insurance broker whose clients include several Chelsea galleries, said that the industry-wide figure — which he estimated at between $400 million and $500 million — covered the physical damage to the galleries themselves as well as art losses.
“Chelsea got hit hard,” Mr. Guerrini-Maraldi said, “and there were other consequential losses.
Because many of the galleries lacked power for a while, and because it then got cold in New York, things that needed to be in a controlled environment were affected. Works on wood, for example – we’re seeing those kinds of claims.”
The scope of the claims could have other ramifications for art dealers and insurers, including higher insurance rates.
Mr. Guerrini-Maraldi guessed that the rate increases could be as much as 5 to 10 percent, reversing recent rate reductions caused by competition and rate wars in the art insurance business.
“A lot of underwriters have felt that art insurance was a good business to be writing,” Mr. Guerrini-Maraldi said, “because it’s profitable, and because losses are rare – although when they do happen, they can be big. Already, we’re seeing that cost reductions are out. People are holding their prices firm, and I’m convinced that we will see a rise in the coming months.”
Meanwhile, a recent visit to Chelsea suggested that gallery owners’ initial estimates that the area would be fully back in business by mid-December were overly optimistic.
While some street-level galleries were up and running, others were shuttered, and at several, signs posted on their doors said that only authorized workers could enter.
Construction crews and gallery staff could be seen through the windows, working on walls and shelving, with no art in sight.