Overstone, the intersection of Art, Finance and Insurance
Overstone is used by financial service providers, insurers and auction houses to assess the risk of fraud, theft, damage and concentration as well as to value individual works of art and large-scale collections. InsTech’s Tara Allsopp spoke to Harco van den Oever to discuss Overstone’s insurance use cases, the data Overstone uses to assess risk and plans for using LLMs (large language models) to support the provision of Overstone’s risk scoring.
What experiences led you to found Overstone?
I spent 12 years in debt capital markets, followed by 12 years at Christie’s in various senior roles, including Global Head of Impressionist and Modern Art. The combination of these experiences gave me a deep understanding of how art can be used as a financial asset.
What problems is Overstone seeking to solve?
I founded Overstone to create a better methodology for assessing risk and valuing art as a financial asset. The total value of global art transactions in 2022 totalled $67.8 billion USD, yet there is a lack of clear measurement of the art’s risk factors. In addition, current valuation methods rely on limited views of the markets and as a result clients’ wealth planning is not optimised. This means there is a lack of leverage and hedging, ultimately resulting in lost economics. At present, the consideration of art as a financial asset is inadequate.
Overstone is seeking to solve this problem by combining analysis of large public and proprietary data sets and art market domain expertise to make the valuation and monitoring process more objective.
How does Overstone calculate a work of art’s risk?
We calculate a work of art’s risk by looking at its saleability, value, authenticity, and condition, leveraging our algorithms. Using staff’s art domain expertise, we take a human-in-the-loop approach to augment the algorithm’s calculations.
What factors are considered when Overstone calculates its risk score?
Our algorithm is based on roughly three and a half million sale results combined with proprietary data sets. Each work of art’s specific characteristics are then considered and used to rate a single object or entire collection.
What new technologies do you envision using to enhance your risk assessment capabilities in the future?
We want to constantly improve our risk assessment capabilities and Overstone’s team reflects this with data scientists taking up a large proportion of our staffing. For example, our data science team is currently on its third iteration of our AI model. We expect there to be more iterations given the rising popularity and applications of LLMs. We are currently investigating how LLMs can be used to help us have a better view of works of art.
How do clients access Overstone and integrate it with other systems?
Our clients access the platform via our ISO-27001-certified web-based interface., While each object is assessed individually, the platform then displays different portfolio aggregate views, highlighting different concentration risks. Clients can use this platform to monitor a single work of art or multiple portfolios. Overstone will also provide API access for those wishing to integrate the tool into their own customer-facing software.
What types of clients use Overstone?
Initially, our clients were only large global financial institutions, and they are still a big part of our client base today. However, we are now working with a variety of clients across industries including wealth reporting platforms, auction houses, family offices and insurers.
What success stories do you have from working with these clients?
Large financial institutions have ameliorated their lending capabilities. Using Overstone becomes a differentiator for these clients, enabling them to have a much more granular understanding of their portfolio’s risk. For example by analysing geographical risk concentration and monitoring value changes. In some cases, these clients also analyse balance sheets which Overstone has made available to them. This ultimately benefits the end customers who have access to Overstone directly to understand their assets’ financial risk. For insurance underwriters, our tools have enabled the retention of clients by reducing reinsurance friction and cost as well as the capture of additional premiums.
Why have you decided to break into insurance?
Both financial institutions and insurers price and manage risk so I knew Overstone had to be relevant to insurers. We were introduced to a global insurer through one of our banking clients. We developed and ran a proof of concept for this insurer and ran several pilots. From this, we have developed our understanding of the unique challenges insurers face and how we can help to resolve these.
How do you see insurers using Overstone?
We are currently engaging with a few insurers who have shown interest in using Overstone during the underwriting process. The tool is also particularly valuable at the point of renewal and during portfolio management as we can monitor the value of art to ensure the policyholder is paying the correct premium and taking adequate steps to reduce their risk.
Brokers are also keen to use the platform as this helps them provide a differentiated service to their clients. If clients have a clearer view of the risk, they are more likely to be satisfied with the service provided to them by their broker.
How can insurers get in contact with you to learn more about Overstone?
Insurers should visit our website, overstoneart.com. We have an enquiry form which can be used to submit interest.