The rapid increase in the market values of fine arts and the expansion of large-scale exhibition activity by museums have resulted in substantially greater need for all-risk insurance and improved risk management practices on the part of museums and private collectors. The catastrophe hazard arising from sudden concentrations of risk and the problem of unforeseen accumulation of insurer liability have restricted the supply of target risk fine arts insurance. Inadequate financial resources available for insurance premiums compel museum managers to depend primarily upon non-insurance methods of dealing with their loss exposure.

This paper examines the problem from the standpoints of the fine arts market and loss exposures, risk management policy choices, the fine arts catastrophe hazard, and contemporary museum practice. An approach to solving the capacity problem for insurance is suggested in terms of a movement in the direction of bilateral monopoly. (page before p. 1).

The rapid increase in the market values of fine arts and the expansion of large-scale exhibition activity by museums have resulted in substantially greater need for all-risk insurance and improved risk management practices on the part of museums and private collectors.