Liability insurance

As I am sure everyone knows by now, AIC and CIPP were presented with
personal liability insurance as a fait accompli at the annual
meeting last week. I am sure Eryl Wentworth had the very best of
intentions, but I doubt that she had enough information to assess
the following:

This is the single issue which has the capacity to destroy our
profession!

I realize this will appear extreme to some of our members, but let
me explain that this is a second career for me; my first was in the
insurance industry where I spent many years, finally retiring as
Director of Corporate Development for General Reinsurance - a
company which insures insurance companies, and at that time, one of
the Fortune 500. It still may be - I have not followed it.

First it is necessary to understand that Personal Liability
Insurance (Errors and Omissions/Malpractice insurance) is based upon
the concept of a pool of conservators, each of whom shares the
success of the pool (rates continue low) or the problems of the pool
(losses are spread across the pool in the form of increased rates).
Do the math:

    1.  In CIPP there are approximately 400 conservators.

    2.  Multi-million dollar paintings are not unusual today.

    3.  If one is lost (and I know of several instances, one in
        which a respected conservator accidentally spilled a cup of
        coffee on a ten million dollar color field painting), losses
        are then assessed across the field, with each of us sharing
        in that distribution  +  the insurers litigation costs + the
        insurers profits +  the insurers administrative and
        marketing costs. Divide that quickly by 400.

Each time there is a problem, we will all be assessed for it, and
our rates will increase.

Earlier I said this issue has the capacity to destroy our
profession. As rates rise, few of us will have the financial
capacity to afford these rising rates. This has decimated the
medical profession because insurance has created deep pockets for
lawyers to pursue. This is exactly what will happen to us.

As we all know, every year sees a decline in the number of
conservators, as they leave the profession because they cannot make
it financially. Numerous others are on the edge financially, and
these fees will ruin them, decimating our profession. I cannot wait
until I have to tell a client that treatment is going to be $1500
and insurance is $2500. Talk about something to send clients into
the arms of restorers!

Make no mistake about this: the art world is replete with fraud -
and they would welcome our insurance. When our practice was in New
York, a new client brought us an Imperial Chinese peach bowl. For
those not familiar with them, the peach pattern was reserved
exclusively for the Emperor's use; they are very rare and very, very
expensive. There was a hairline crack to be bleached and sealed.
After completion, I returned it and he said the remediation was
excellent, but we had changed the color of the bowl and we had
better contact our insurance company. It was a chemical
impossibility to change the color but he was adamant that we contact
insurers. It took me two days to canvas the Chinese art world, but I
did find the dealer who had sold him the bowl, and the dealer told
me Mr. Herzman had been given a low price on the bowl because it was
off color. Yes, there are those waiting to prey upon us.

Our greatest protection lies in not having these deep pockets. In
the forgoing incident of the color field painting,the insurers did
not sue because they would spend $50,000 or more with little or no
chance of recovery even if they won. The conservator had no
insurance, nor enough assets to make the suit worthwhile. He was
saved by not having insurance.

As we have been told, participation in the insurance is
voluntary--and it is. In fact, no one can force you to buy it.
However, in other fields the courts have found *repeatedly* that
it's availability and the lack of a practitioner's possession of it
is, de facto, malpractice. You are guilty of malpractice *if you do
not* have the insurance.

The husband of a  client of ours is a malpractice insurance
adjuster, and his words to us from the other side of the fence
were,"...do everything you can to keep it out of your profession."

There are members of AIC who believe we should have malpractice
(masquerading as Personal Liability Insurance), and I can only
believe they do not have enough business knowledge to understand
that an alternative way to control these problems is contractually
with your client. Over the years we have spent many thousands of
dollars with attorneys perfecting a protective contract, and it has
stood us in good stead. I will be happy to share it with anyone who
needs it; just send me a self addressed, #10 business envelope with
appropriate postage, and I will send you a copy. Because laws vary
from state to state, please review it with your attorney before
using it.

The contract is formidable, and somewhat scary when you read it.
However, in the thirty years we have been using it, we have only
lost two jobs because of it (and we average 1000 +/- projects a
year).

Send envelopes to:

    F.A.C.
    5840 Corporate Way
    Suite 110
    West Palm beach, FL
    33407



                                  ***
                  Conservation DistList Instance 19:2
                 Distributed: Wednesday, June 22, 2005
                        Message Id: cdl-19-2-001
                                  ***