Insurance Frauds in the Art Business
frauds of all types often become more prevalent during
economic downturns, as those who liquefy assets find
that the market values of their assets are less than
they expected. If property owners cannot sell assets for
a profit, or even what they paid for the assets, they
are often tempted to collect the sums for which their
assets are insured. A poor economy can make the
temptation even greater among art collectors and art
dealers, who face a volatile market. Works of art can
sell for much more than their assessed value if eager
buyers compete with each other at auction. However, the
insured value of a piece of art can be significantly
greater than its market value if too many potential
buyers decide to postpone decorating or collecting until
In most ways, insurance frauds involving art are not
different from other frauds. Owners of the items stage
robberies and file claims. Art dealers take advantage of
real robberies and claim losses on items not taken in
the robberies. Claimants inflate values of stolen items.
A collector may sell an item at auction and then file an
insurance claim several years later, claiming that he or
she sold the item. If investigators cannot prove that
the collector knew of the sale, the collector may avoid
punishment for fraud. Organised criminals often purchase
jewelry, antiques and pieces of art with the proceeds of
their criminal enterprises. They then insure the
valuable items and report them as stolen or destroyed.
The money that they receive from insurance firms has
been washed of its illegality.
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makes art insurance frauds different than other frauds
is the ambiguity of the values of many pieces of art.
Market conditions can cause the value of items to
increase or decrease dramatically. Different experts may
have differing opinions on the values of pieces of art.
In many cases, fraud starts with the valuation of an art
object. Minor works by major artists are given greater
values than they deserve because of the artistís name.
Unscrupulous art dealers may forge the provenance of
unmarketable pieces of art. One tactic used by those who
conspire to defraud insurers exploits the ambiguity and
complexity in art object valuation: They purchase
policies in August, when senior insurance executives and
underwriters are on vacation. Insurance firms are
starting to specifically address frauds involving art by
insuring more art objects individually, rather than
covered with other property owned by the insured. Each
art object is insured for an agreed upon sum and
revalued at specific intervals. The holder of the policy
or the insurance firm may request a revaluation upon the
death of the artist, when the value of a piece can rise
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