The recent theft of several objects from the British Museum has underlined the need for effective collection management among museums, galleries, and other collection-based institutions. While government-sponsored institutions may ultimately be covered for their losses by the state, private institutions will typically purchase commercial insurance. For such institutions, failure to demonstrate collection management best-practice could trigger negative consequences in the event of a loss, including financial or reputational damage, or less favourable insurance terms.
Permanent collections lack state-sponsored protection
In mid-August, the British Museum announced (opens a new window) that several objects in its collection were missing, stolen, or damaged. The objects, which included gold jewellery, semiprecious stones and glass dating from the 15th century BC to 19th century AD, had previously been held in a storeroom for academic and research purposes.
The majority of private institutions are eligible to apply for the Government Indemnity Scheme (GIS), which provides indemnity when borrowing objects either from public or private collections and individuals within the UK and abroad. However, the GIS does not provide cover for works in situ, such as those as part of an institution’s permanent collection.
As a result, the theft or loss of, or damage to permanently held objects represents a significant risk to private institutions. The consequences of these risks are various, and include:
Financial loss of unrecoverable objects, or where objects depreciate in value as a result of damage, where those objects may otherwise have been sold.
Income loss in relation to failure to win grants on the basis of inadequate collection management.
Potential closure of exhibitions on a temporary basis, or cancellation of planned exhibitions where lost objects where integral to the display.
Reputational damage due to a perceived lack of effective collection management, which may complicate efforts to purchase or loan works from potential dealers, agents, or partner institutions. In the example of the British Museum, it may also encourage public concerns around the security of artefacts of global importance. This is true even in cases of loss of objects that might not otherwise have been possible to sell.
Hindering the ability of the institution or its partners to perform necessary or important research in relation to lost objects, potentially to the detriment of the global cultural community and public benefit.
The advantages of scheduled cover
For private institutions without state-sponsored protection, commercial insurance offers protection for objects held as part of permanent collections. This can usually be arranged on either an unscheduled or scheduled basis:
Unscheduled cover – provides blanket cover for an institution’s collection up to an agreed value. This is a more flexible form of cover, and doesn’t rely upon exact values for individual objects. In the event of a loss, institutions will need to retroactively establish the value of lost goods.
Scheduled cover – provides cover for individual objects based on a pre-established review (‘schedule’) of the collection.
The flexibility provided by unscheduled cover can be a tempting option for many institutions, particularly those with extensive collections. Likewise, many institutions will have collections that predate digital record keeping, increasing the likelihood of unaccounted-for objects. Others may lack the labour resources to effectively schedule their entire collection.
However, unscheduled cover cannot entirely remove the need for firms to conduct a collection review. Where loss or damage occurs, institutions will still need to establish the prior value of that item if they are to receive compensation. It goes without saying, that this is much harder to achieve after the loss has taken place. Furthermore, without first agreeing values for individual objects, assessments of loss will often be subjective. In the example of depreciation of objects following damage, multiple assessors have been known to produce widely differing estimates of the loss incurred, with compromise usually required.
Likewise, some collections contain objects that are not only very valuable, but are also unique. Although financial compensation may soften the blow of the loss of such an item, its uniqueness (and perhaps also its relationship with the rest of the collection) might remove any reason for replacing it. In such instances, primary consideration should be given to proactive forms of risk management.
Collection reviews – best practice for institutions
Ultimately, any risk management decision, including whether or not to purchase insurance, is made much easier by arranging a comprehensive survey of a collection in advance. Where insurance is desired, institutions who can demonstrate effective collection management will be best placed to secure optimum terms from insurers.
The museum sector in the UK has a well-established standard for collections management, Spectrum (opens a new window), which is embedded into the Accreditation standard. Spectrum contains nine ‘primary procedures’, or best practices for collection management, for object entry, acquisition, location and movement control, inventory, cataloguing, object exit, loans (in and out), and documentation.
Spectrum also contains a set of additional procedures, which cross-refer to the primary procedures, including a standard for carrying out collection reviews. The requirements under this procedure are as follows:
Establish a policy on why and how collection reviews are carried out, answering questions such as legal and ethical considerations, priorities for review, who is authorised to conduct the review, expertise required, and how results will be reported.
Create and file a written plan for each review that includes the methodology to be followed, the criteria to be assessed and the scoring system to be used.
Record the date of each object assessment and the person responsible for a scoring decision.
Record the relevant numbers of each object (or group of objects) assessed.
Add review assessments to your catalogue.
Analyse the results of collection reviews and recommend appropriate follow-up action, for example the need to revalue, or adding new knowledge about an object.
Spectrum also includes a separate procedure for valuation. Again, this mandates the need for a policy on valuation, as well as a written procedure on how valuations should be carried out, and principles for valuing different objects, such as:
Current ‘market value’ of comparable objects.
Original valuation or purchase price, adjusted for inflation.
Cost of conservation.
Cost of acquiring another comparable object (potentially including transport and other costs).
To protect against the risk of underinsurance, valuations should also regularly be kept up-to-date. As a rule of thumb, it is wise to renew cover every three-to-five years. For collections in which contemporary works are heavily represented, consider doing so more regularly.
For further information, please visit our Fine Art page (opens a new window), or contact:
James Ferrer, Head of Fine Art, Specie & Fine Art Practice
T:+44 (0)20 7933 1501
E: james.ferrer@lockton.com
