How do you insure a $6.2 million banana?

Conceptual art can be a slippery concept. Photo: AFP

It's the kind of story that makes you roar with laughter or indignation. A crypto entrepreneur just spent $6.2 million on a banana duct-taped to a wall. What's more, the ordinary Dole banana in question had been bought for just 35 cents that morning at a fruit stand in the Upper East side of Manhattan, according to The New York Times.

This object is a work of art called "Comedian," by Maurizio Cattelan, that was sold on Wednesday at Sotheby's. It was created in 2019 and first shown at Art Basel Miami Beach, where the Perrotin Gallery sold three editions for between $120,000 and $150,000 each.

Every generation gets to be outraged or befuddled by the latest iteration of what gets called "art." Impressionists like Claude Monet or Cubists like Pablo Picasso were far from the first to scandalise a cultural age, and their works are worth many millions today. More recently, Mike Winkelmann, aka Beeple, produced a piece of purely digital art, entitled "Everydays: The First 5000 Days," which became the first Non-Fungible Token sold at Christie's and fetched almost $70 million in 2021.

There is much erudite debate about what qualifies as art, but being a financial journalist and something of a nerd my question was: Can you insure "Comedian," and what exactly would be insured? If you're spending $6.2 million on a banana taped to a wall, there's a big question as to what you're even buying. It's an ordinary banana. It's going to rot! Justin Sun, the buyer, said he planned to eat it once the sale had gone through — and in fact "it" has been eaten before, including by rival artist, David Datuna. 

I asked Robert Read, who has been insuring artworks for more than 30 years at Hiscox Ltd. Some works, he says, are too ephemeral to be insured. For example, Andy Goldsworthy, a British sculptor and photographer who works in nature, draws lines on beaches and rings the bases of trees with arrangements of leaves. Tides and winds will wipe out this "land art" within hours. Official photographic prints of his work are worth something and are insurable, however.

"Comedian" is more than a banana on a wall,  it's an idea, too. You might think it's a dumb idea, but it apparently has value. Galleries and critics have long recognized this. Way back in 1917, Marcel Duchamp hung a urinal the wrong way up on a wall and signed it (and not even with his own name). One edition sold for more than $9 million in 2009. You can see a version of it at the Tate Modern in London. Tracey Emin's "My Bed" is, well, a rather messy unmade bed. It was last sold by Christie's for £2.5 million ($3.1 million) in 2014.

The late art critic Robert Hughes despised conceptual art such as this because there was supposedly no craft to it. But technique isn't the only measure of art. There are plenty of painters capable of producing hyper-realistic work so skillfully executed that it looks like photography, but none are as famous or valued as the much simpler screen prints of Andy Warhol or rough graffiti of Jean-Michel Basquiat.

Some artworks don't even exist in physical form — and I'm not talking about NFTs. In the early 1960s, the French artist Yves Klein, who is famous for the particularly vivid blue that he invented, sold some truly ephemeral work. He dropped flakes of gold leaf into the Seine — it was part of a payment for an "invisible work" — while the buyer was meant to burn a fake paper check from Klein as part of the ritual. (Some checks were kept and one was sold in Paris this year for more than $1 million.)

Art decays, too. Damian Hirst's first shark in formaldehyde, "The Physical Impossibility of Death in the Mind of Someone Living," was reportedly remade when hedge fund billionaire Stephen Cohen bought it in 2004 for at least $8 million (the body had rotted). Many modern pieces of digital or electronic art will break down like an old TV. Read says artists are getting better at leaving instructions on how to revive such pieces. Just because the parts get changed, doesn't mean a piece is no longer the same artwork: Think of the paradox of the Ship of Theseus, or for fans of the British comedy "Only Fools and Horses," think of Trigger's broom. 

But let's get back to the important question about how to insure the Sun's banana. It has things in common with other works: It's a pre-existing object that is highly perishable. It comes with a certificate of authenticity and a set of instructions on how to replace the banana with a fresh one when required. These are the documents that prove Sun's right to tape a banana to a wall and say it is the $6.2 million artwork. That is what the insurance would cover if they were burned or lost or stolen. 

Read estimates the global value of premiums paid for art insurance at more than $2 billion per year, of which $750 million is direct art insurance and the rest of art cover contained in high-value home insurance policies. The market has been growing at about 5% per year, but the effects of climate change and growing threats from protesters, such as those who threw soup at Leonardo Da Vinci's Mona Lisa in Paris this year, are expected to increase premium rates.

The market is split between private owners and institutions such as galleries. There is also insurance for transporting works when they travel to appear in exhibitions. Anything with a physical form that can be valued by an expert can be insured — from an edition of Duchamp's "Fountain," to a painting by Vincent Van Gogh to the certificate for "Comedian" now owned by Sun. For art, owners often take out title insurance against the risk of a rival claim of ownership emerging, but most insurance is traditional property cover, which protects against damage, loss or theft. 

Is the banana worth all that money? The value of an asset comes down to the income it will produce or a projection of what someone else will pay for it. Sun made his fortune facilitating the trade of cryptocurrencies, which is fitting. These too are ostensibly valueless, made-up things. Maybe Sun is convinced that someone else will pay more than $6.2 million for Cattelan's work in future, or maybe he doesn't care. Perhaps the moment he won the bidding — and saw himself splashed across the world's media as the person who bought "arguably the most famous artwork of the past decade"— was the spectacle he truly wanted to own.  

In The Accursed Share, the French intellectual Georges Bataille developed a theory of economy as the accumulation and destruction of excess resources. I often think of this when I see a billionaire take a rocket flight for fun or someone crawl through the streets of London in a vastly over-engineered gas-guzzling supercar. To me, these things are no less absurd than a banana taped to a wall. 
 

Sketch: TBS

Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. Previously, he was a reporter for the Wall Street Journal and the Financial Times.

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.