The Online Art Collector: how a pandemic created a new generation of collectors
Authored by AXA XL Head of Fine Art & Specie, Americas, Patrick Drummond
The next generation of art collectors has arrived, and it is reshaping nearly everything about collecting.
It was a move born out of necessity. As the world closed its doors in early March and events everywhere were canceled, many businesses turned to the internet. One of the last industries to embrace the online world, the art industry was forced by circumstance to consider how to exhibit and sell online.
It was a massive shift for many art dealers and galleries, which truly did not have much of an online presence prior to the pandemic. Perceived as an in-person transaction, art was generally sold in a face-to-face setting. In 2019, online art sales made up just 9% of the entire art market.
Yet in a contactless environment, much of what the art world considered compulsory practice dissolved nearly overnight. Within mere weeks, galleries had established an online presence and had begun to create virtual showrooms. Online auctions were set up, and the art world was able to right itself amid a sea of exceptional change.
Not only that, the art industry has found both a new way to reach buyers and an entirely new pool of art collectors. By moving operations online, the art market has managed to transform its entire business model. The next-generation art collectors lead the way, with 91% of them having purchased art online in 2020. Their influence is widely felt: Over 83% of all art collectors have now purchased art online at least once – a 64% increase over 2019. For artists, social media is key – 58% of buyers say they have discovered artists and their works via social media, and 66% have found them via online marketplaces.
Also, thanks to the transformation of how art is sold, 68% of collectors now say they have bought as many or more works of art in 2020 than in a normal year. That has led to the art world having one of its most robust years ever. The online art market more than doubled in value, increasing from $6 billion in 2019 to $12.4 billion in 2020.
The Missing Piece
It has also led to a gap in understanding how to protect oneself during an online purchase. Also, there could be a gap in insurance protection for many art collectors, veteran or otherwise. With next-generation collectors reporting an average $10,000 paid per work of art, covering that investment is critical. Yet too often, art collectors are not aware of where their coverage begins and ends.
Before purchasing your next artwork, AXA XL’s Art division specialists recommend considering the following:
Insurance: Make sure to understand the type of insurance you need in order to protect your investment. Have a conversation with an insurance carrier that specializes in art and collecting. AXA XL has an experienced team of art experts on hand to answer questions and help you protect your investment.
Authentication: Do you know the work is truly authentic? Have you done research to determine if the seller is reputable?
Protection while in transit: Whose insurance policy will be covering the purchase while it is in transit? Typically, a seller would cover that event, but not always. Moreover, many policies covering collectibles does not cover the transport of the items. Review your policy with your insurance carrier. Never assume coverage is in place on the seller side. Always clarify with the seller prior to purchase.
Insurance coverage post-purchase and beyond: Once your artwork is home, have you insured it? If so, is it insured for the correct value? Also, valuation fluctuates over time, for example, as artists become more popular or demand increases for a certain style. The amount you insure for today may need to be adjusted regularly. Likewise, collectors should be working with a specialized insurance carrier to valuate their entire collection, not just individual pieces.
Find specialized expertise:
As the art world shifted business as usual, so too must insurance carriers. When looking for guidance and protection for your collections, consider how your insurance carrier is adapting to meet the changing needs of the collector world. Do they understand the details of the art sale lifecycle? Do they offer online resources that allow you to research coverage options? Do they have experts in art and collecting at your disposal? Are they innovating to make it easier to protect your investment?
For example, AXA XL has partnered with Zillion, a point-of-sale jewelry insurance producer, to bring that same ease of insurance purchasing to online art collectors. While the art world has yet to launch similar capabilities, we as an insurance provider are working to adapt to the changing needs of the art market.
Working with an insurance broker who specializes in art insurance and works with specialty insurance carriers is critical. A specialized insurance carrier can adapt to your changing collection, as well. A conversation with your carrier can help you clarify your collecting goals, valuate your current collection, and improve coverage where needed.
Not every insurance carrier understands art and collecting. Look for a specialty insurance carrier that has a strong history of working in the space. Their background in claims, understanding of the buying process, insights into artists and trends, and industry data give them the breadth of knowledge that is necessary to best protect your collection.
Buying with Confidence
The appetite for art and collecting continues to grow, and the next generation of collectors will continue to help redefine how art and collectibles are showcased and purchased. As demand for online transactions grows, it is important to have specialized assistance to understand your purchases, and to advise on art valuation, repair, restoration, and insurance protection.
In the event of a loss, having a specialty insurance carrier with experts in art and collecting on staff can help you recover quickly. Your investment in art deserves fair valuation and the knowledge of how best to protect your collection so that you can enjoy your art for years to come.
About AXA XL
AXA XL is the P&C and specialty risk division of AXA which provides property, casualty, professional and speciality products to industrial, commercial and professional firms, insurance companies and other enterprises, here in the UK and throughout the world. With underwriting teams based in the US, UK, EMEA and Asia Pacific regions, we can make decisions close to the markets you serve and work with you to tailor cover to your business needs.
We help businesses adapt and thrive amidst change. Rather than just paying covered claims when things go wrong, we go beyond protection into prevention so your business can go beyond the unexpected.
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