Into the future: as the year unfolds, many potential sources of loss loom on the horizon.

As we move through 2004, it's valuable to reflect back and look forward, asking how we fared in 2003 and what perils might be down the road. For example, in 2003 we worried about public reactions to the hard market, whether Congress would address the asbestos crisis and strident opposition to the use of credit in underwriting.

So how did we do? Consumers were clearly not happy about the jump in prices. Who would be? But this time we had carefully explained it to the media in advance. While there were many more stories about market conditions, most were at least neutral, citing the major reasons for higher rates. By comparison with past hard markets, we have done well so far.

On the asbestos front, we talked about the drain on resources from claimants who were not ill and the burden on local economies when claims overwhelm otherwise healthy companies. The media in general reacted positively to our messages, but legislation has yet to be passed. However, some state courts are establishing inactive dockets to separate those who are seriously ill from unimpaired claimants who can be dealt with at a later time if and when they show signs of illness.

In 2004, the issue of credit scoring has moderated to a much more realistic and less paranoid level. As we know, the media and public can be influenced by determined education. The industry spoke forcefully about how the use of insurance scores benefits the majority of consumers, the growing use of credit scores in all financial areas of life and the importance to individuals of maintaining a credit record. More than 20 states passed new legislation on insurance scoring in 2003. None banned its use and most dropped the harshest provisions after they were given better information.

What, then, is on the horizon for the test of this year? One emerging peril could be silicosis. This disabling and sometimes fatal lung disease is caused by overexposure to respirable crystalline silica or quartz, the second most common mineral in the earth's crust. More than one million workers are exposed to silica and more than 250 die each year of silicosis. The number of claims filed against U.S. Silica, a leading industrial sand producer, rose from 93 in 1997 to 5,142 in 2002. By the end of the first six months of 2003, they had jumped to more than 15,000.

Another problem could be litigation over obesity linked to fast-food consumption. Suits were filed against McDonald's and Kraft claiming their food made people reach unhealthy weight levels. One suit was dropped and the other dismissed, but few expect this issue to go away as concern over weight-related health risks grows. Some litigants will point to the growth of the fast-food industry, the prevalence of obesity among Americans--young people, in particular--and food manufacturers' advertising. In the past two decades, the percentage of children who are overweight has more than doubled and the percentage of overweight adolescents has tripled. Not coincidently, some will argue, a high proportion of advertisements aimed at children are for food, drinks and candy and the highest advertising expenditures are for the least healthy food products. Possible legal liability theories in obesity cases run the gamut from advertising and product liability to failure to warn.

We also could see an increase in construction-defect litigation over mold as the issue subsides in the homeowners policy sector and migrates to the potentially more lucrative commercial arena. While right-to-cure laws have been passed in many states since the problem first erupted in California, opinions differ as to whether these new laws will result in fewer lawsuits. Right-to-cure laws establish procedures that offer builders an opportunity to correct faults before suits can be filed, but some say too many builders still take a Band-Aid approach, which fails to rectify the root cause.

There are many other potential sources of loss on the horizon--a possible increase in employment practices liability as the baby boom generation ages, more lawsuits against those who serve liquor as efforts to deter drunk driving are stepped up and even litigation against reality TV shows. If parents are now filing suits against municipalities for playground-injury scars that might prevent their children from becoming fashion models, what will be next? This will continue to be a complex and challenging year for the insurance industry--after all, given our business, why should 2004 be different?

Gordon Stewart, a Best's Review columnist, is president of the Insurance Information Institute, New York. He can be reached at [e-mail].