We can have facts without thinking but we cannot have thinking without facts. — John Dewey
A big Bloomberg News piece on insurance has unleashed the wrath of that industry, entangled New York’s Deadline Club in an awards dispute, and now pits journalist against journalist.
Matthew J. Winkler, Bloomberg’s editor in chief, accused the journalism club of “unethical” conduct in its most recent awards contest for allowing an insurance industry trade group to compromise the “integrity” of the club’s judging.
In a three-page letter to Tim Paradis, an Associated Press reporter and the club’s president, Winkler said that in its jury deliberations it accepted industry allegations that a Bloomberg Markets magazine expose, “The Insurance Hoax,” contained factual errors without talking to Bloomberg. Winkler said the club eventually backpedaled and admitted that the piece didn’t contain errors after all but found other reasons to deny the story an award.
“We don’t know why ‘The Insurance Hoax’ failed to win any of the four awards for which it was a finalist,” Winkler wrote. “We do know the process by which the stories were judged was irregular, opaque and unethical.”
The text of Winkler’s letter, obtained by The Audit, is available here.
The issue goes far beyond a journalism contest and pulls the curtain back on an aggressive public relations campaign by the insurance industry and others against Bloomberg News and a bitter argument over what is and isn’t an “error.”
The campaign has been led by the Insurance Information Institute and its president Robert Hartwig, who in a widely circulated letter to Bloomberg Markets’ editor Ronald Henkoff calls the story “malicious,” “biased, “inaccurate,” “intellectually shabby,” and more. Significantly, he contends the series contains several factual errors, ranging from the misuse of a key industry ratio to blown arithmetic, that are so important the series couldn’t have been written without them.
In an email to me, Hartwig goes so far as to call the series the Million Little Pieces of insurance journalism.
“It made a big splash when it came out but when subjected to fact checking it simply didn’t pass muster,” Hartwig says. “The authors and editors at Bloomberg should be embarrassed because the piece is a disgrace to the Bloomberg name.”
Bloomberg says it stands by its story and, after meeting with Hartwig, declined to run a correction. A spokeswoman adds that Bloomberg is still waiting to hear from the Deadline Club.
Paradis, the club’s president, told me the club plans to write back to Winkler. Meanwhile, he defended its awards process and offered what amounts to a qualified endorsement of the facts in the stories.
“We received complaints about the story and therefore had no choice but to examine it,” Paradis said. “We did so in good faith and gave both sides fair treatment. The results speak for themselves as the story was named as a finalist in several categories. If an entry doesn’t merit being a finalist, it’s not included. We had several categories for which no entrants were recognized.”
I’ll cut to the conclusion: a review by The Audit found no significant factual errors and no errors at all involving the insurance industry. The III’s allegations are unfounded. Details are below.
As a side note, Winkler’s allegation of an “unethical” and “compromised” awards process also appears to lack support. While the club seems initially, and erroneously, to have accepted the industry’s charges of fact problems, it backed off those conclusions after talking to Bloomberg.
To me, though, the issue of whether the story contained fact errors is central. With errors, the series’ credibility is undermined and the focus shifts to the journalists and their methods. With no errors, the series stands as a compilation of facts that portray an industry out of control and ripe for reform.
But it goes even deeper than that: everyone’s entitled to his own opinion but not to his own facts. Anti-Bloomberg forces say the story has errors; Bloomberg denies it; the Deadline Club doesn’t say one way or another.
But without agreement on facts, journalism itself becomes impossible.
I'm surprised you gave Bloomberg a pass on averaging multi-year growth rates, rather than compounding them, calling it unusual but allowable. Averages have their place, but they should never be allowed in interpreting a sequential time series, as happened here. If a company tried to talk about average growth over the years the way Bloomberg did, I'd hope the SEC would fine them for misleading investors. That's the type of misuse of statistics that Mark Twain complained about.
Posted by KLH
on Wed 9 Jul 2008 at 02:55 PM
I am disappointed to see that the point-by-point rebuttal by Mr. Hartwig and my own critique failed to convince Mr. Starkman about the article's shortcomings. We'll just have to agree to disagree.
Frankly, I just chalk this up to more of the same--the fact that the bulk of those in the media covering insurance (as well as those assessing the performance of reporters doing insurance stories), just don't understand how the business works, let alone appreciate how much it means to society and the economy.
Mr. Starkman raises the issue himself in his post.
He says that insurance is a "backwater in the mainstream business press," which is absolutely right, although I would dispute his conclusion that because of this, "its actors are thus unused to serious, arms-length scrutiny."
In fact, all the industry ever gets is negative press. Part of the problem is poor public relations by the industry. (Perhaps the Insurance Information Institute, beyond their useful annual "Fact Book," should offer at least an online introductory seminar for journalists covering the industry.)
But it's also the old "man bites dog" problem--no one thinks an insurance story is news if billions in claims are paid and lives, homes and businesses are rebuilt; they only send reporters when there is a dispute of some sort.
The result is that insurance news--good and bad--is under-reported or blatantly misreported. And when reporters are assigned stories, too many don't know what they are talking about, or falsely assume that all insurers, as well as their adjusters and agents, are crooked.
As for the Bloomberg letter of complaint to the Deadline Club, a couple of points.
"Bloomberg News" Editor In Chief Matthew Winkler characterized me in his letter as "a frequent defender of the insurance industry," as well as someone who "regularly appears as a speaker at industry functions..."
I knew Bloomberg and company would dismiss me as some industry shill. But as my loyal readers know--especially many of those in the industry having felt the sting of my pointed barbs--that's a bunch of hooey!
Indeed, any regular reader of my blog or NU column would probably be more likely to characterize me as "a frequent critic of the industry."
To refresh your memory, just check out my harangues against the mega-brokers after the contingency fee abuse and bid-rigging scandal, the book-cooking by AIG using bogus finite reinsurance purchases, and, yes, the industry's often poor handling of Hurricane Katrina claims. And don't get me started about the horrors of the health insurance industry.
In addition, Bloomberg might be unaware that a substantial part of the "National Underwriter" readership (15,000 subscribers) are in fact consumers--corporate insurance buyers including risk managers, CFOs and others who assess exposures and, in some cases, purchase insurance to cover them.
If this consumer audience ever believed that me or my magazine were shameless apologists for the insurance industry, they would send us packing.
Instead, we've grown tremendously among the buyer crowd in terms of name recognition, respect and influence.
As for the fact that I "regularly appear as a speaker at industry functions," I am guilty as charged.
But, frankly, who else would have me speak? As a business journalist covering the insurance industry full time, I cannot imagine a paint manufacturing conference asking me to talk about trends in their field.
Is Bloomberg suggesting I am bought and paid for by speaking fees?
Perhaps, but the fact is I have never been paid to speak to any group I've addressed. (I was offered a paid gig recently, but turned it down.)
I do speaking engagements to raise NU's profile and build on my reputation as an opinion leader, not to pad my bank account or solicit kickbacks from the industry I cover.
However, Bloomberg's letter did make one point that gave me pause: "Friedman never took the basic journalistic step of asking Bloomberg to comment on the 'Insurance Hoax' before he condemned it as a 'hatchet job' in his online column."
If I was working on a news story, I would absolutely agree--that's not fair. But in an opinion piece in an online blog, the journalistic ethic is murkier.
Still, it could not have hurt to seek out Bloomberg's opinion at the time. I was just so taken aback by the overwhelmingly one-sided attitude permeating the piece, as well as the way they presented their statistical "facts" and failed to distinguish the nuances within this vast industry, that I rendered my verdict based on the article as it stood--as any of their readers would.
Of course, Bloomberg's people and anyone else are welcome to respond to anything I say, right on my blog at www.property-casualty.com. That's what the comment section at is for.
Bottom line, I'm sorry Mr. Starkman didn't see the Bloomberg piece my way.
In my expert opinion, the Bloomberg article simply did not capture the "truth" behind this story.
A few bad actors does not an industry make, whether the field is insurance or journalism.
Posted by Sam Friedman
on Thu 17 Jul 2008 at 12:51 PM