A multi-million-pound art blaze has left a locally based insurer facing substantial payouts. Clients of Hiscox were among those whose works were destroyed in last month’s Momart warehouse fire in London.

Among the losses were 100-plus items belonging to Charles Saatchi including 50 Patrick Herons; 22 Gillian Ayers; 16 Damien Hirsts; and nine Barry Flanaghans.

The St Peter Port branch said it was too early to quantify how much Hiscox would have to pay out.

‘The total loss from the fire is tens of millions of pounds. Probably somewhere between £50m. and £100m.-worth of items have been lost, but it is impossible to quantify our own loss at the moment,’ said underwriting director Steve Camm.

‘It will take one or two weeks before the claims start to come in. Of course, the artwork is insured by individuals, not the storage experts, so there will be a multitude of claims.

‘On top of this, many owners will not know that their works were being stored there because items are always in transit from exhibitions.’

He was confident about Momart’s security procedures, despite allegations from some art holders that the warehouse was not as well protected as it could have been.

‘When we are insuring pieces, we take obvious precautions that the places at which they are being stored have minimum security precautions such as alarm systems. Momart are one of the largest warehousing firms and most-experienced storage companies. This fire was just one of those things that happen.’

Hiscox, a FTSE 250 company with an annual turnover of £1,083m., is the largest fine art insurer in Europe.

‘This sort of thing has happened before and it will happen again; they are acts of God which we are here to insure against. As a company, we are big enough to be able to cope with payouts like this quite easily.’

Mr Camm said that the company set a $100m. limit on any one policy.

‘We have aggregation limits and buy catastrophe cover from the reinsurance market to cover ourselves in the event of such situations as these.’

He added that although the company was facing substantial payouts, the incident was likely to boost the number of policies taken out in the near future.

‘In a sense this is useful, because it will remind people why they have a policy or make them get one soon because they realise they at least get a payment if there is a fire.

‘It also gives us the opportunity to show how we react to these tragedies and after such an incident, we will normally see an increase in demand for more policies and that is true in most insurance fields.’

Hiscox plc is made up of a large Lloyd’s syndicate, a UK insurance company, Continental insurance branches and a Guernsey offshore branch. The firm specialises in fine art, kidnap and ransom cover.

‘The company set up a branch in Guernsey because of the client confidence factor. Our clients are very wealthy and very comfortable with offshore finance and the security and confidentiality the Guernsey environment offers.

‘A lot of this is to do with perception, because people see Guernsey as a place where details are less likely to be disclosed. Of course, there are slightly different rules and regulations in the island compared to the mainland.

‘Guernsey is the best and most highly regulated insurance haven outside the UK but it also has all the advantages of being close to the UK, for example, there is no time difference. To keep confidentiality, we also operate by attaching no names to our policies.’