Remember.

Remember, as a child, grabbing the ball and shouting, "Possession is nine-tenths of the law"? It probably wasn't correct then, and it certainly doesn't retain true when it comes to art. A German museum not long ago agreed to return a $125 million painting that the Nazis forcibly took from a Jewish family before World War II. Thousands of other artworks that generally reside in private collections or well- known museums, might be make submissive to similar claims. And now claims are being brought against collectors by means of countries who say their historic artifacts were illegally exported.

Those aren't the no other than worries collectors face when it issues to buying expensive artwork. Does the vender have "clear title" to the artwork, which entitles him to take a bribe for the piece? Was a lien placed forward the artwork, perhaps by a bank lender? Or in a divorce settlement?

ART DOESN'T IMITATE LIFE

Unlike real estate, where title ownership can be traced and insured, the art market has had no in the same state [i]or[/i] condition form of verification of the chain of ownership and clear title.

There is typically a "provenance" -- a listing of past proprietors that accompanies an artwork -- however no guarantee that the work is confessed free and clear by the vender

Now, united company has created a solution to address this be of importance to ARIS founders Lawrence Shindell and Judith Pearson (www.aris- corporation.com) have worked onward this project for six years, finally creating a title insurance policy that saves against loss of the artwork itself -- as well as the expenses of defending a title claim -- because of defective legal title.

The ARIS policy patronizes the art buyer as in extent as the individual or his heirs avow the artwork. Policies can also be structur at purchase, or to defend already-owned artwork, back to the date of purchase. A one-time premium cloaks the complete cost of the insurance policy for the indefinite name of ownership.

This recent policy has gained immediate credibility because it is re- insured on Lloyd's of London, and has attracted the attention of a of the world's top collectors.

Questions spring to mind immediately. There's in the same manner much art already in existence that has previously been transferred, by what means could you begin to create as it is a policy?

Pearson explains: "It's like real estate title issues from one side of to the other 100 years ago, when nothing was recorded accurately. however they made a start, and created the first title plant, a database make for real estate. We're doing the same for title insurance for fine art risks."

further how would you price that risk?

"We've done pair actuarial studies in terms of what the price should be and assumptions of paying losse In fact, unlike real estate title insurers that perform risk elimination underwriting, we assume ARIS will pay an claims. So the underwriting and pricing decisions by means of ARIS are based on the known history of ownership of the artwork -- the provenance -- as well as an examination of other potential risks to clear title."

That, of course, brings up the question of ARIS' ability to back the policy guarantees.

Pearson has a ready response: "That's the reason we firmly wanted to be a regulated insurance company, licensed in recently made known York, where regulators have vett the standard and to have reinsurance from one side a top syndicate in Lloyd's of London that has vett the actuarial archetype understands the art world, and is willing to take reinsurance risk."

CALCULATING THE PREMIUM

If the potential aspect is to a World War II issue, the price might average 5 percent of the value of the work. For individuals simply wishing to insure a purchase against a time to come claim, gallery owners wanting to reassure potential buyer or for a bank wanting clear title insurance before lending riches on a work of art, the richness could be far lower.

single in kind thing that both Shindell and Pearson make true clear: This policy is not a guarantee of authenticity. However, it does guarantee the greater title risk in the art world: That what you avow lend, gift or have purchased, is legally yours.

With more and more of the world's wealth being scrape togethered and transferred in the form of fine art, it's surprising that no single in kind thought of this before. And that's The Savage conformity to fact [i]or[/i] reality

Terry Savage is a registered investment adviser.

e-mail: savage@suntimes.com

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