Insurance for Art

We have shockingly witnessed Ethiopian artists seeking donations and financial support to cover emergencies such as medical or funeral expenses time and again. Most of them are either unable or unprepared to cover such costs which in turn have led many of them to untimely death, and public disgrace. If the art community could plan and negotiate affordable insurance coverage, they can avoid both ill-fated consequences. In a country of rich art collections and profound artists, underwriting suitable insurance for art and artists could indeed be in high demand.

Although we couldn’t witness one in Ethiopia, there exist different types of policies worldwide for artists as well as their works. The cover, among others, could be designed to include the risks they face incorporating liability risks, death benefits, disability income benefits and medical expenses. The policy could be purchased by the artists themselves, their associations or institutions they work for.

For professionals, any work of art is often expensive and need to be insured. Creating a great piece of art takes bold risks. That’s why insurance companies should design appropriate policies for unique products to manage these risks. It’s then that artists can excel in creating more valuable work of art without restraints or in full tranquility of mind.

The coverage may protect artistic works, their equipment, or artworks undergoing installations. Insurance for musical instrument is particularly suitable for professional musicians and persons using an instrument as part of their activity such as music teachers and collectors, among others.

Musical instrument insurance includes different covers. The most common are related to damage, fire, theft, deterioration and water damage. A professional liability covers a contract cancellation in case the musical instrument got damaged. Other covers may be extended to the contract based on the needs of the underwriter. The premium varies depending on the type of the musical instrument and its value. As part of the profession, the musician may sometimes use several instruments during the same musical performance. For this type of profile, insurers generally offer specific insurance that can cover several instruments. Comprehensive insurance is ultimately the optimum guarantee to protect oneself in a musical tour, a concert or a musical rehearsal.

On the other hand, for amateur musicians wishing to insure their instrument, a cover can be found in certain homeowner’s insurance contracts. Indeed, in this particular case, the musical instrument is part of the transferable capital. Thus, it is covered in the event of theft, fire or water damage.

The cost of an insurance cover for a musical instrument depends on its value. A purchase invoice is generally sufficient for the insurer to define the premium to be paid. In the case of expensive professional equipment or a collector’s piece such as painting or a musical recording, an expert can estimate the value of the instrument and thus its insurable value. The premium generally varies between one and two percent of the insurable value. The extreme rarity of a musical instrument can make it a masterpiece, which is worth a lot.

Many commercial offers are now designed for owners of musical instruments. In England, for example, in addition to traditional insurers such as Allianz Musical Insurance and some specialists, new entrants are now proposing customizable online contracts. These new entrants insure all kinds of musical instruments and equipment from rare ones to everyday classics, on top of providing cover for all musicians, from beginners and students to professional touring artists, concerts, DJs, musicians in bands. The policy even goes up to covering the instrument while on tour, unlimited professional use, loan instrument hire costs, theft, loss, fire and accidental damage, damage in transit, and others to be included as flexible add-ons either as stand alone or comprehensive packages. The geographic scope can be worldwide or domestic, depending on coverage choices. For events and concerts, having proper insurance protection should also be one of the requirements by authorizing bodies to manage risks economically.

There are 17 insurance companies in Ethiopia. Except the Ethiopian Insurance Corporation, the biggest and oldest, the rest are private companies, with Zemen Insurance being the latest entrant in the industry.

Considering products, general insurance (GI) dominates the sector claiming 95Pct of the revenues, with motor vehicle insurance continuing to lead earning – constituting 49.45Pct of total insurance premiums and 52.54Pct of the gross premium written of GI class of insurance.

Using measures of insurance penetration and insurance density – both – used as an indicator for the development of insurance within a country, Ethiopia is by far lower than regional, continental and global averages. Its direct contribution to employment and gross domestic product is also very low.

There are many issues in the Ethiopian insurance that needs policy intervention. The industry is suffering from major “structural impediments” that prevent it from reaching its full potential. Many of the challenges are inter-related and require a combination of regulatory, demand and supply side policies to address them over time. All these measures witness the need to renovate the sector and curb structural challenges. One way to enhance the insurance sector’s performance is through product innovation and by availing art, artists and musical instrument insurance policies. Of course, in a country where farmers constitute the majority, it seems outlandish to propose insurance cover for art works, artists, and musical instruments. However, insurance products that serve a specific sector or target group should be encouraged to serve unique needs and respond to risks. The one-size-fits-all approach doesn’t work to increase the low level of insurance penetration and density across Ethiopia. This is why specifically tailored policies should be catered to different sectors. The insurance industry should also use the provision of insurance coverage for artists as a catalyst for promoting the insurance service itself.

8th Year • July.16 – Aug.15 2019 • No. 76