An Appetite for the Palette

The Art Loss Register helps insurers find missing art.

February 22, 2010 Photo
Fast cars, beautiful people, exotic expense-paid trips, and high-tech gadgets. The sexy and exciting world of art theft seems like a Hollywood script ready for the newest James Bond avatar. Sadly, the reality is quite different, and there is little chance that you will be leaving your desk anytime soon. With the exception of the top few fine-art underwriters, most adjusters find the process of dealing with fine art losses one of methodical reporting and patience.

If you have an eye towards recovery, one of your first steps is to contact The Art Loss Register. Most major insurance companies subscribe to the ALR, and any fees for their services are likely covered by such subscriptions. First established in London in 1991, its founding shareholders include major businesses from both the insurance and art industries.

The ALR will register the pilfered item in its database of stolen or missing art and will notify you immediately when the item is located. It searches all the major auction houses, art fairs, dealers and galleries for the items listed on the Register. Additionally, the item could be discovered when a collector or dealer searches the Register when offered the stolen work by the thief or someone who acquired the work subsequently.

The ALR is a free service to law enforcement, so it works very closely and successfully with police agencies worldwide in uncovering the whereabouts of stolen art. The FBI, U.S. Customs, and numerous local police departments contact the ALR on a regular basis.

There is nothing like getting a call from an ALR representative that a previously stolen and long ago paid-on work has been located. It’s impossible to predict when the work will surface, but, if properly registered with the ALR, the chances of recovery dramatically increase. Registration means good business for the insurer and (mostly) happy policyholders.

Once the ALR has notified you of the whereabouts of the stolen work, don’t expect the current possessor to give up the picture quietly, though. Generally speaking, the more expensive the item, the more likely the chance that nasty lawyers will come out of the woodwork. Complicated laws of different states and countries, good faith purchase laws, the Uniform Commercial Code, subrogation laws, and statutes of limitation are all standing in the way of the insurer reclaiming the art.

Consultation with an in-house lawyer or an art recovery specialist at the ALR is highly recommended. Avoiding litigation is another priority, and skillful negotiation for a release of the work is an art unto itself. The ALR has successfully negotiated the return of over $300 million in stolen artwork over the last two decades.
Process and Expertise Matter
One of the major challenges to fine art recovery is locating the original claim file. Many insurers purge their records after a number of years, and retrieving archived material is next to impossible. The ALR never deletes anything from its computerized records database. Decades-old policies, police reports, theft notices and photographs are available. Some law enforcement agencies actually rely on the ALR having access to police reports previously purged.

The better the registration that goes in at the time of the theft, the better the information that comes out when the work is located. Need help in describing a stolen work of art? The Inland Marine Underwriter’s Association ( has issued an excellent paper on Object ID, an international standard for describing art, antiques and antiquities.

Going it alone can be disastrous for resolving art claims, as the following anecdote reveals.

Recently, a stolen surrealist painting from 1968 was located by the ALR on the consignment market. The insurer had paid out the claim 40 years earlier and was looking forward to recouping the loss.

Without thinking about the ramifications, a self-proclaimed Sherlock Holmes-style adjuster sent a demand letter to the attorney for the individual who had obtained the painting. By writing this demand letter, the adjuster unwittingly triggered the “demand and refusal” rule in New York, which started the clock on the statute of limitations. Under New York law, the insurer had three years from the date of demand to commence an action to recover this painting. Our loss adjuster, now working part-time, unknowingly allowed this time to pass while supposedly gathering the necessary documentation for a lawsuit he was surely going to lose.

Fortunately, ALR was able to work around the statute of limitations issue and broker a very favorable settlement for the underwriters. The sums involved in most art thefts are considerable, and experience matters. An art recovery specialist or attorney is probably merited in most cases.

Return or Sale
Insurance companies are not in the business of storing or collecting fine art. Once a stolen work is recovered, the next step is to decide what to do with it. Is the item the property of the insurer or the policyholder? The language of the policy generally controls the terms that will answer this question. Typically, in fine art policies, the recovered work is offered back to the theft victim/policyholder or their family for the amount of the original paid claim plus recovery costs. However, in many standard homeowners policies, the policy is silent as to who owns the work post-recovery, so the insurer must rely on the various case laws that address subrogation. The top fine art insurers may still offer the recovered item back to their policyholder and will negotiate a reasonable settlement, especially if the work is a cherished family heirloom.
How to Approach a Stolen-Art Claim

Visit the site. There is no substitute for hands-on scene analysis.

Establish proof of loss. Verify ownership right away. In the current art market, adjusters need to have a heightened awareness of fraud. There may be limited avenues available to an institution or collector in a difficult financial situation, beyond their insurance policy, for liquidating money tied up in art. Go beyond the usual claim forms, receipts and sworn statements:
  1. Verify the claimant’s identity.
  2. Confirm ownership is not through another name or legal entity.
  3. Research any liens or loans against the work.
  4. Check for any past losses, damages or outstanding lawsuits.
  5. Investigate recent changes in financial circumstances or sudden theft incentives.
  6. Confirm coverage and that the piece was not located elsewhere at the time of loss.
Determine causation precisely. We know many art thefts are perpetrated by someone who is known to the insured. Check on recent changes in circumstances for staff, including finances and personal affiliations. Who had access to the premises, keys or codes during daylight? Look for damage to windows and doors and don’t forget photo documentation of the site.

Analyze and interpret coverage. Check for endorsements, warranties, exclusions or caps on the policy. Alarm warranties are the most typical endorsement. Look for non-compliance.

Set reserves. Given the high values involved, carefully assess your subrogation potential and vigilantly uncover negligence.

Manage processes and timelines quickly. Gather and share your findings with law enforcement and the ALR within 24 hours after notification. The chances of recovering the piece are highest in the days immediately following the loss.

Negotiate settlement. Watch those appraisals! Many adjusters make the mistake of looking at how much a work of art is insured for and negotiate settlements accordingly, but art losses work in the opposite direction. Think backwards. Establish the correct value with an independent appraisal and then apply coverage. For example, a painting insured for $1 million is stolen. An independent appraiser confirms from photographs that it was actually worth $3 million. There may be $3 million in coverage for general contents on an insured’s policy, and the policyholder might be eligible for up to 150% of the scheduled value on a fine art policy or be able to claim additional funds under personal blanket coverage. This will dramatically affect settlement negotiations. Know the whole story before coming to the table with a proposal.

Be proactive. If you see a museum or collector has protocols that lend themselves to being targeted, share your expertise on how to think like a thief.
Claire Marmion is a licensed and bonded adjuster and owner of The Haven Art Group ( Contact her at (212) 634-6425 or
What do you do if the policyholder does not want the recovered item returned? Many theft victims might have been pleased with the claim settlement and don’t want to reimburse the insurer for a work that they no longer love. As part of its service to its member insurance companies, the ALR will provide access to art historians, provenance researchers, and independent appraisers and restorers. They will assist the insurer in selling the work privately or through an appropriate auction house. The ALR does such volume in this fashion that it enjoys favorable commission rates that it passes on to its member insurers. The proceeds of sale are sent to the insurer and the case is closed.
Christopher A. Marinello, JD, is general counsel and executive director of the Art Loss Register, currently based in London. He teaches law and ethics in the art market at New York University and is a member of the Inland Marine Underwriters Association, Arts & Records Committee and the Appraisers Association of America, Advisory Committee. Contact him at (917) 450-5799 or
Sponsored Content
Daily Claims News
  Powered by Claims Pages
About The Community

CLM’s Insurance Fraud Committee identifies, analyzes, and offers education on emerging fraud schemes and tactics; monitors and reports on developments in case law, state fraud statutes and applicable regulations; collaborates with other anti-fraud industry organizations and associations; and seeks to provide amicus support in matters of importance in the fight against insurance fraud.

Community Events
No community events