Abstract
The aim of this paper is to identify the risks that need to be addressed when holding fine art, determine which are perceived as being the most important, and whether the risk perception is influenced by demographic variables such as age, educational background, and field of occupation. To identify the risks and evaluate the risk perception, we used a purposely designed questionnaire and sent it via various sources of communication systems and applications to individuals knowledgeable on fine arts. Findings revealed that, generally, art deterioration, art fraud, and art theft are the three main highlighted risks, with art deterioration considered in the high-risk range. In terms of risk perception, forgery is the biggest concern. On the other hand, considerations of the investment value of art lessened perceived risk exposure. Furthermore, the study has shown that certain risk perceptions were influenced by the participants’ demographic variables. Both the identified risks and risk perception considerations analyzed within this study provide us with insights as to what needs to be considered when offering fine art insurance, particularly when it comes to which risks that are perceived as being the most pressing by potential policyholders, and how these perceptions vary according to individual demographics variables as noted above.
Highlights
The insurance industry has been growing over the past few years, with more and more people seeking to be protected from the unknown, especially in the case of highly valued items (Friedman et al 2020)
Knowing the demographics of a country and relating this to perceived risks of fine arts will enable insurers to determine the potential clientele, the value this clientele gives to the fine art, and in turn the premium to be charged for such a policy
We focused on these demographics since, as mentioned earlier, prior studies have shown a clear link between these variables and risk perceptions across a wide variety of domains e.g., (Savage 1993; Sund et al 2017; Weisenfeld and Ott 2011)
Summary
The insurance industry has been growing over the past few years, with more and more people seeking to be protected from the unknown, especially in the case of highly valued items (Friedman et al 2020). We focus on key demographics such as age, level of education, or field of study on the risk and valuation risk exposure ratings We have chosen these particular variables since, as noted in Bezzina and Grima (2012) and Bezzina et al (2014), they are the variables that generally have an effect on perceptions of risk and on the demand which will have an effect on the potential entry of Insurers in this market and the value of the risk. Knowing the demographics of a country and relating this to perceived risks of fine arts will enable insurers to determine the potential clientele, the value this clientele gives to the fine art, and in turn the premium to be charged for such a policy. Malta is a country rich in both culture and art, it provides a noteworthy market potential for the fine art insurance and the study findings can be used by the Maltese insurance companies when offering and pricing fine art insurance policies to individuals. There is the same limitation with the contents section of the policy, in the foreign market, there are specific policies catering for fine art losses (MiniCo Insurance Agency LLC 2020)
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