What is the value of Art?
Following the recent record breaking sale of Jeff Koons’ ‘Rabbit’ (a new world auction record for a work by a living artist), one can’t help but question, what is the value of art? Or alternatively, what are the relevant factors in determining its value, if not the historical prevalence of the piece?
Art in its simplest form can be defined as — the expression or application of human creative skill and imagination, typically in a visual form such as painting or sculpture, producing works to be appreciated primarily for their beauty or emotional power. In its broadest sense, art is a method of communication.
But therefore how can something with no real use in the modern world, aside from visual appeal, sell for millions?
Fine Art has increasingly become a currency of choice for ultra-wealthy corporations and individuals. News reports highlighting record auction prices have been a feature of the art world since the Meiji Yasuda Life Insurance Company paid nearly $40,000,000 for Van Gogh’s sunflowers in 1987.
Within the global art market, participants will seek recognised signals to identify a potentially lucrative piece. These signals reveal themselves in varying forms but commonly through; curator observations, exhibition time and most prominently, whether influential collectors are buying the work. As everyone relies on these unique fundamental signs to highlight desirable pieces, at some point they start to unanimously agree on which pieces are the most sought after.
“In other words, the reason some artists’ work sells for millions of dollars is because there’s a consensus in the art world that those works should sell for millions of dollars.” Gaby Del Valle, Vox
Ultimately, the value of art depends entirely on what someone is willing to pay for it. As wealth continues to rise, there is increasing demand to invest in an asset that can be enjoyed whilst it increases in value. Corporate demand for art is also on the increase, with many organisations now owning art as an investment and/or to decorate corporate offices.
Therefore, with increased wealth and accessibility to art globally, the value of art is likely to continue rising exponentially and with no foreseeable limit. The fast paced nature of the art world means that it is imperative to the continued success of any insurer that all valuations of artwork are conducted by the appropriate professionals and must be updated regularly to avoid becoming outdated. The fine art insurance market is both an exciting and rewarding section of the insurance industry, rooted deep within the history of the Lloyd’s of London. The continuous developments in the means to view and purchase artwork that may have once been inaccessible, introduces unique insurance requirements to prospective clients and provides great opportunities for the future of the market.
“The very idea of art being worth anything, to a mind trained to associate fiscal worth with functional value, is ludicrous, since the apparatus that assembles value in art is a fuzzy one, a sum of socialized activities (writing, talking, thinking) of no translatable worth in the ‘real’ world, and of no logical equivalence to that pile of rags in the corner of the gallery or [that] picture of a flushed duke in a periwig” Ben Street, a former Art21 Blog columnist.
Written by Louis Shropshire, Specie Underwriting Assistant, Markel Marine
