Movement on the Chinese Drywall Problem

The Insurance Journal recently reported a possible breakthrough in the Chinese drywall problem. Inez Tennenbaum, the chairman of the U.S. Consumer Products Safety Commission, was in Shanghai in late October to discuss the issue. Tennebaum was quoted as saying, “Up to today we’ve not been able to get any Chinese manufacturers to cooperate.” She believed one Chinese government-owned company was primarily to blame for the lack of progress. The U.S. Consumer Products Safety Commission recommends that all tainted drywall be torn out and discarded and is pressing manufacturers to take responsibility for the costs.

Tennenbaum says the “major breakthrough” was the decision of one company, Knauf Plasterboard Tianjin Company, to pay for repairs to around 300 homes. The company is a German-Chinese joint venture. Though it’s only a first-step, it is welcome news to property insurers and their adjusters who were among the first to discover the problem and have been facing increasing pressure to pay for repairs.

As reported in Xactware’s 2009 Property Report, the drywall imports were the result of the tremendous boom in demand that followed the 2005 storm season. The tainted drywall emits sulfur gases that lead to unpleasant odors and damage to metals such as the copper found in electrical wiring. Although the drywall appears to have been used primarily in the southern states—especially Florida—reports have come in from 39 states plus the District of Columbia, Puerto Rico and American Samoa. Our 2009 Canadian Property Report also noted that a significant amount of Chinese drywall was imported to Canada.

Read more here.

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