Art and Risk: Terror Tariff Topples Tate Turner Tour

As reported in the Cleveland Plain Dealer here, the high cost of insurance -- particularly insurance against terrorism-related risks -- has resulted in the quiet cancellation of a major traveling exhibition of paintings by the great 19th century British artist, J.M.W. Turner.  The tour, organized by London's Tate Gallery, would have brought some 80 major Turner works to Cleveland, New York, Washington and [*sigh*] Los Angeles in 2006.  The paintings carry an estimated value approaching $1 billion, and the premiums for the necessary insurance have thus far proven prohibitive, despite the relatively low frequency of major art losses:

'The history of risk shows that it's very small,' said Graham Beal, director of the Detroit Institute of Arts. 'The incidence (of payments) over history is minuscule.'

A factor contributing to the cost of terrorism insurance is that in 2006, the federal Terrorism Risk Insurance Act will expire. The act, passed by Congress after Sept. 11, authorizes the government to reimburse insurance companies for up to $100 billion for losses above a $15 billion threshold.

Because insurers are uncertain about whether the act will be renewed, they're passing along higher costs to customers, said Robert Hartwig, chief economist for the Insurance Information Institute in New York. He said those higher costs undoubtedly affected the Turner show.

In Cleveland, insurance would have accounted for $800,000 of the $2 million cost of the show, Domine said. The costs were higher for the museums in New York and Washington because both cities had suffered terrorist attacks, she said, although she did not have figures. In Los Angeles, the problem was higher insurance premiums for earthquakes.

Turner himself knew a little something about risk: he famously witnessed the spectacular fire that consumed the Houses of Parliament in October 1834, and produced several notable paintings of the event, one of which is reproduced above.