The Pyrrhotite Plague

Foreword: As with other posts I have confined myself to presenting these construction quality issues in the context of the unsuitability of professional indemnity insurance as a consumer protection mechanism and, by extension, the challenges faced by regulators wishing to construct/re-construct (excuse the pun) building industry indemnity schemes and encourage private insurer participation.

Without going into the merits of the position of various participants in the design, supply and build value chain, the relevant legislation and court rulings, or the indemnity stance of insurers, the pyrrhotite in concrete issue in some North American jurisdictions is a useful example of a challenge that has its roots in an inadequate building materials approval and control framework.

For those who would like to dig a bit deeper, here are two concise articles to get started -

Quebec

https://www.clydeco.com/en/insights/2020/05/the-pyrrhotite-case-the-art-of-apportioning-liabil?utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration

Connecticut

https://www.courant.com/opinion/editorials/hc-ed-lessons-from-canada-pyrrhotite-part-2-0113-20190113-rgruy43ufvezji6papesqmdlvu-story.html

As with the current flammable composite (laminated) cladding issues in Australia (La Crosse building, Melbourne), the UK (Grenfell Tower, London), and elsewhere, the pyrrhotite in concrete issue in North America is another, less dramatic but equally relevant example of a product quality/suitability issue that has evolved into a long, drawn out and immensely complex resolution process as construction chain participants ducked for cover, inherent limitations in light-touch regulatory models were exposed, and insurers indemnity stance hardened as unanticipated exposures multiplied - leaving consumers high and dry.

Note: The leaky building issue with monolithic cladding also had North American origins; arising from the introduction of pre-cast concrete panels as a high-rise building element during the 1990s.

As with the recent NSW Australia building re-regulation push, in both these North American jurisdictions there is a growing realisation that only a complete, root cause construction industry reset will resolve the consumer protection imbroglio and respond effectively to contemporary community safety and quality expectations.

PS: While this post is initiated by the compounding affect insurers’ reaction to construction industry problems has, as a supplier to the construction industry, insurance is an important contributor to any solution. From a professional standpoint, my posts remain motivated by the social and governance opportunity for the insurance sector that a more progressive stance and more effective engagement with construction sector participants, and regulators, will have. It’s happening; but remains at risk from the just so many competing demands out there!