Recently we had the pleasure of hosting a panel discussion on the complex and often contentious issues surrounding the seizure, restitution and provenance of art. The panel featured leading experts in the sector, including Paul Hewitt, Director General of the Society of London Art Dealers, Helen Mears, Head of Curation and Research at Royal Museums Greenwich, and Alexander Herman, Director of the Institute of Art and Law.

In recent years, the international art market has been confronted with increasing scrutiny of the acquisition and trade of certain types of artworks. This criticism stems from the growing demand for the restitution of art acquired during periods of colonization or conflict.

The response has been mixed. Many dealers and collectors have voluntarily returned pieces to their countries of origin, while others have seen their collections seized and returned by regulators. Since its inception a decade ago, the New York Antiquities Trafficking Unit has recovered a whopping 4,600 items, including antiques stolen during World War II and more recent conflicts in the Middle East.

Our panelists shared their insights into how the regulatory landscape is evolving to address these issues, and how museums, collectors and dealers are responding to change. The overarching message was clear: these issues are not as binary as the media often portrays them, and as attitudes continue to evolve, the industry is striving to take a more conscientious approach.

Changing regulatory landscape

When acquiring a work of art, different jurisdictions apply different legal standards for transferring full ownership. However, as Herman pointed out, there are also ethical standards that should play a role in acquisitions – a factor that is not always covered by existing legal frameworks.

There have been attempts to incorporate ethical standards into law, such as the 1970 UNESCO Convention, which established robust provenance standards to curb illicit trade in cultural heritage. These standards now require anyone investigating the original ownership and authenticity of a work of art to go back at least to 1970, with the aim of protecting historical and cultural items from illicit trade.

Similarly, the EU is tightening regulations. New regulations coming into force next year will impose strict due diligence requirements on art dealers. The new regulations will require owners to obtain new import permits for certain archaeological objects over 250 years old that originate from outside the EU. Again, these measures are aimed at protecting cultural heritage while imposing significant compliance obligations on the industry.

Impact on the industry

As regulations have evolved, the art industry has had to move and adapt. As we heard from Hewitt, the industry was initially somewhat hostile to new regulations, but in recent years we have seen something of a shift. Collectors and dealers are increasingly open and sympathetic to them, recognizing the importance of transparency and ethical responsibility.

As Mears noted, due diligence is firmly embedded in museum policy and practice. However, with growing public interest in provenance, museums are becoming more proactive in sharing the history of the items they display. This is nevertheless a challenging task, as the required information is not always readily available. In some cases, it may not even exist at all.

The insurance industry could act as a mediator between the art market and regulators. By participating in regulatory discussions, insurers could help create standards that protect historical and cultural heritage, while allowing the art market to operate in a responsible and sustainable way.

Hewitt also spoke about the fear that is pervading the art trade industry in response to the new EU legislation. The challenge, again, is in obtaining the necessary documentation to obtain the permits required to trade in the EU. Without these, dealers risk having their artworks seized.

Further complications arise from the differing legal standards of title in different countries. What may be legal in the UK may not be recognised property in the US, a concept known as fragility of title. This discrepancy exposes dealers and collectors to the risk of confiscation when dealing in art across borders.

How the insurance industry can help

The insurance industry already plays a role in protecting dealers and collectors from the risk of repossession. However, our panelists explored ways insurers could expand their role.

Herman contributed thoughts on how the insurance industry could play a role in bridging the gap between ethical and legal standards. For example, could insurers offer policies for collectors who choose to return art on ethical grounds, to compensate for the financial loss?

Hewitt also suggested that the insurance industry could act as a mediator between the art market and regulators. By participating in regulatory discussions, insurers could help create standards that protect historical and cultural heritage, while at the same time allowing the art market to operate responsibly and sustainably.

The future of the art world lies in balancing diverse interests and adapting to new norms that reflect a more conscientious approach to cultural heritage. The evolution of the industry in the coming years will be fascinating to watch. In the meantime, the insurance sector has some food for thought – not to mention an intriguing opportunity – to define its role in this transformative period.

James Garthwaite is a senior underwriter for fine arts at Liberty Specialty Markets