International Foundation For Art Research (IFAR)
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September 11th:

Proceedings of an IFAR Symposium on
February 28, 2002

The Response from the Insurance Industry page 2

by Dietrich von Frank

I have been asked many times how much art was destroyed on September 11th in total, and I have always said, "I don't know!" We still don't know, and we probably will never know unless accurate record keeping of all perished pieces exists, which I very much doubt.

AXA Art's three clients kept accurate records, and checks to the insured will go out soon.

This straightforward commitment to stand behind our clients prevails throughout the entire insurance industry. Insurance companies deal with and manage risk on a daily basis, and from an insurance point of view, a total loss is always the most straightforward claim. In such cases, the insured object is gone or is destroyed beyond repair or restoration—is simply unrecognizable as a piece of art work.

However, since acts of terrorism as a named and insured peril were part of commercial property insurance policies up to September 11th in the U.S, terrorism coverage will be and already is being excluded on commercial insurance policies going forward.


Because there are simply no investors in global insurance capacity left who are willing to put up funds for the coverage of manufacturing plants, office towers, and nuclear reactors, that is, commercial enterprises in the U.S., as they believe that another act of terrorism may happen in the U.S. Paranoid overreaction perhaps, but even all State Insurance Departments—usually looking out for the customer—had no choice but to approve the exclusion of terrorism coverage on U.S. commercial insurance policies.

A Federal Indemnity Program—the Homeland Insurance Fund—which for six consecutive years would pick up all terrorism losses in excess of $25 million to be paid by the insurance industry in the future, is deadlocked in Congress, and the chances for its creation in 2002 are dim.

You may have heard or even experienced it in regards to your own insurance policies: premiums are going up across the board, and many of these rate increases are blamed on September 11th. It is the cause for such "consumer unfriendly" acts by the insurance industry.

The truth behind higher insurance premiums for meaningful coverage, however, is a little more complicated. The global insurance industry—like all financial markets—moves in cycles. Insurance experts call a cycle of robust premium rates a "hard market," just as a cycle of falling rates is labeled a "soft market." And as in any other capitalist system, the trigger is supply and demand. Supply: investors provide insurance capacity; demand: claims and losses are frequent and high.

Over the last five to seven years, up to about the beginning of last year, insurance rates, especially for industrial risks and, incidentally, for art insurance, fell steadily. The years 1998 and 1999 were extremely consumer friendly, as annual rate reductions rose to double digits, especially in the London Market, still the world's largest insurance pool.

But then, we had earthquakes in Japan, we had Swissair III, as well as the Concorde loss in Paris, and investing into insurance capacity became far less lucrative. Hence, reinsurers raised their rates for primary carriers who then turned around and raised rates for their coverage of the "end-consumer", and all this started well before September 11th. With rates now quickly climbing, insurers rush to set up new capacity to profit from the "hardening" market, and the cycle starts again. Yes, insurance provides protection for unforeseeable events, but it certainly is a business.

Two heavily destroyed pieces of public art have been found at Ground Zero: the Calder Stabile and Koenig's Sphere. I went to see both pieces, which was extremely moving. If we agree that art, and especially art publicly displayed, helps us to connect to the world we live in, these two pieces should definitely become part of the design of a September 11th Memorial, and, notably, in their current state. As both works of art have been rescued from the debris, their damaged and nearly destroyed condition will be the perfect vehicle to remind the public in the future of what has happened, and, therefore, will remain true public art, art for everyone to remember.


To read transcripts of the other talks, please click on the desired topic below.

Public Art at the World Trade Center
-Saul S. Wenegrat
Response from the Insurance Industry
-Dietrich von Frank
The World Trade Center Memorial, 1993
-Elyn Zimmerman
The Insurance Adjuster's Role
-Gregory J. Smith
The Artist Residency Program in the Twin Towers
-Moukhtar Kocache
The Downtown Institutional Impact
-John Haworth
The Art Lost by Citigroup on 9/11
-Suzanne F.W. Lemakis
The Heritage Emergency National Task Force
- Lawrence L. Reger