60 seconds with...James Glynn

In October, he joined Antares as specie deputy underwriter, bringing his extensive experience to the Lloyd's insurer's marine cargo & specie team. He explains some of the challenges that come with "insuring desirability" in a market where criminals are just one step behind the latest security measures.

Can you tell me a bit about the art and specie market and its history?

The term specie is a strange and archaic one. It is literally defined as being "in its actual form" but in practice refers to anything that is intrinsically valuable – anything from precious metals to bank notes and stamps and everything in between.

The origins of the specie market grew out of the marine and cargo market when gold and diamonds were first transported by sea from southern Africa. As the value of gold and diamonds increased the underwriting naturally became more specialised until it became a market in its own right.

Has this class of business always been strongly linked with Lloyd's?

It has and the values of the items that are covered mean they're often unsuited to being covered by any one company. By nature, the items are relatively small and transportable, which when coupled with their high value makes them very attractive to seize. Mitigating the risks here is a constantly evolving process by everyone involved.

The specie and fine art market cover a huge diversity of risk, many of which may be unusual in their own geographical region. The syndicate structure of Lloyd's, its technical expertise that has been built up over the long years along with its security and global reach makes it uniquely placed to underwrite these risks.

What's it like moving from the broking side of the business into an underwriting role?

There are more similarities than you'd think. While the roles are diametrically opposed both are experts in their chosen fields. Brokers will usually consider the risk from an underwriting perspective so as to realistically set their own clients' expectations about price and coverage that can be achieved and decide where best to market the risk and how best to broke it.

That's the case for underwriters too: they've got to put themselves in the brokers' shoes – it's a commercial environment and there's a fine line between risk mitigation and securing our clients' business.

I guess the biggest difference is moving more from the theoretical to the practical. As a broker you can see something is a good write on paper, but as an underwriter you have to be convinced that it will be as good in practice.

What are some of the biggest challenges for art and specie underwriters?

High value, easily transported and easily transferrable items are desirable by their very nature and they're always going to be targeted by criminal elements – both externally and within an organisation. Security is paramount from an underwriting perspective but we've also got to work within the constraints of the insured.

Jewellers are going to seek a balance between deterring robbers without deterring customers;  museums and art galleries don't want to compromise their exhibitions by putting everything behind thick security glass but equally they want to ensure the pieces are safe. As security has improved, criminal gangs have evolved too and increasingly we're seeing the use of physical threats to coerce employees to circumvent the security. 

Another area is ensuring insureds are buying adequate levels of insurance for the values at risk. Gold and diamond prices today bear little resemblance to those just a few years ago. Works of art – particularly modern art – can see huge fluctuations in value over just a short period and it's important to periodically value the items. Where it's an agreed value policy it's important the insured understand they may be underinsured.

Has the financial crisis had an impact on values?

The high end of the art market has pretty much recovered but jewellers have had to deal with a tough climate. Luxury items was one of the first areas to give and jewellers have not been helped by high gold and diamond prices reducing their profits. Those that are dealing at the higher end have fared the best, but a lot of jewellers have found they've been more profitable selling their older stock as scrap.

What are some of the more memorable risks you've placed/underwritten?

Claims are often the most memorable aspects of a risk. Some that come to mind include an art dealer where a large part of his art collection was destroyed by a fire caused by a faulty toaster.

I remember an incident where the doors of an armoured car flew open and left a trail of dollars along the highway. Some passing motorists kindly collected a lot of the bills but unfortunately many then forgot to hand them in to the authorities. Another memorable one was a running gun battle along a Brazilian motorway.

But my favourite was a US jeweller who also wanted to open a BBQ food restaurant. His plan was to offer his clients the chance to view and buy jewellery at the table. We were hoping they were going to wash their hands first! Strangely we decided that wasn't one for us.

Have we seen any change in the type/size of claims in recent years – has the risk of theft increased/decreased?

The types of claims are always evolving as new security measures are brought into place. It remains true that the risks are always going to be highest where the security is weakest: so when goods are outside of the security controlled environment they are most vulnerable.

A good example is the number of high-profile jewellery retailers targeted by professional gangs in recent years. The level of security is high by jeweller’s standard but less than those of banks and big cash and transit operators.  If the rewards can be nearly as high you can see why criminal gangs might look to target them.

Another worrying trend in certain regions is kidnapping; where criminal gangs are looking to get around good security measures by kidnapping family members and forcing employees to assist them and in some cases even steal goods for them.

Tell me something I probably wouldn’t know about the market...

All diamonds are made from the same thing but their value can vary enormously.

The fancy coloured stones were once considered low value but nowadays they're amongst the most valuable. The same painting can change from being virtually worthless to being worth a small fortune in a relatively short space of time. We've all seen currencies and precious metals fluctuating in pricing in recent years.

What makes them so different in value? Is it the purity, the rarity? They're all factors but the values are as much a reflection of market trends and fashions as they are of rarity or provenance. Ultimately what we're insuring is desirability.

Tell me what you enjoy doing when you switch your blackberry off?

My wife is a self-employed antiques dealer so furniture and ornaments can be a bit of a transient thing in our house. I never know quite what I'm going to find when I come home of an evening!

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