Insurers active in the fine art and specie market are recalibrating wildfire exposure after January’s Los Angeles blazes, but the specialty line remains open for business with “plenty of capacity,” one specialist told Insurance Business.
After a season that saw catastrophic losses to homes, studios and cultural assets across Altadena, Pacific Palisades and parts of Malibu, the event has split carriers into two camps, according to Kyle McGrath (pictured), head of fine art and specie – North America at Markel.
“For those that had expected losses, the go-forward strategy is probably quite similar to what they’ve been doing, meaning they had a sound aggregation plan in place,” she said. “For those with outsized losses or significant portfolio impacts, they probably will need to change tack, maybe scale back exposure in that geography.”
Lloyd’s of London estimated about $2.3 billion in net losses from the California fires, while marketwide insured-loss estimates have ranged from the low $20-billions into the $30-billions as claims developed. Analysts and brokers have characterized the episode as the costliest wildfire event for insurers in US history.
McGrath said most specialty carriers were already modeling catastrophe exposures and actively managing geographic aggregation before January, and that practice is set to intensify.
“Each carrier has a different threshold for when and how they model an account and assess portfolio impact,” she said. “Generally, those strategies will continue across fine art and other lines exposed to these fires.”
While hurricanes often provide days of lead time for mitigation, wildfires “move faster and give less lead time,” which elevates the importance of pre-planned protocols for clients and brokers, she added.
Where carriers are reacting most visibly is in underwriting appetite and client requirements. McGrath described a sharper focus on risk-mitigation plans, including everyday protections and evacuation protocols, are now “table stakes, especially for larger accounts.”
“Appetite has definitely narrowed for certain carriers,” she added. “Just because you have capacity doesn’t mean you’ll deploy it the same way you did before.”
On the other hand, pricing impacts are likely to be nuanced. On admitted paper, McGrath expects carriers to “maintain integrity, charging appropriately for exposure where possible,” while non-admitted markets retain more flexibility.
For collectors, McGrath’s advice centers on preparedness and documentation. “First and foremost, work with a broker who really understands the art market and your specific type of collection,” she said.
“Record-keeping, including substantiating values, keeping photos, and documenting your collection so that post-loss, there’s clear evidence of what was there, is best practice everywhere, but especially in catastrophe zones.”
She also urged clients to pre-identify the pieces that matter most, whether by sentimental or financial value, and rehearse evacuation plans with specialist packers, shippers and storage providers.
Wildfire mitigation efforts are critical year-round. A good example is The Getty Villa, which caught fire during the Palisades blaze but was spared extensive damage due to brush-clearing efforts throughout the year, as reported by The Los Angeles Times.
When it comes to storage, McGrath cautioned against one-size-fits-all advice.
Moving works to professional facilities outside high-risk zones can reduce individual peril but may introduce aggregation risk at the portfolio level and transit exposures for the items themselves.
“Each scenario has trade-offs,” said McGrath. “The best approach is a conversation between the broker, the client, and the carrier. You weigh the protections available in the home, gallery, or museum versus those of a storage facility.”
Looking ahead, McGrath expects sustained scrutiny of catastrophe exposure, but not a retreat from the class.
“From a capacity standpoint, we haven’t seen carriers pulling out,” she said. “Some may take a more conservative approach, but overall, the market in this space is robust and will continue to be. There are a lot of carriers looking to enter the space because overall it performs quite well, even though catastrophic events do happen.”
Part of the reason is that the remit of “fine art and specie” continues to widen. Collectors are devoting serious capital to categories once considered niche, from sports cards and wine to luxury handbags and sneakers.
“A lot of people think ‘fine art and specie’ means just art, but it covers a wide range of collectibles,” she said. “What’s fascinating is the rise of other classes. Auction houses now run full sales dedicated to them. Many collectors focus exclusively on these classes rather than mixing across categories.”
For insurers and brokers, this evolution means ensuring that coverage is accurate, claims handlers understand how to value and work with these assets, and the right vendors are in place. “It keeps the job interesting because no two risks are exactly the same,” McGrath said.
