In addition, the article painted the entire industry with a single brush, which I feel is unfair, considering that the overwhelming majority of Katrina claims were, in fact, paid, and that the industry laid out tens of billions to rebuild these flood-prone areas—often when the cause, wind or flood, was not clear.

He also takes issue with my findings that Bloomberg did not make factual errors:

Wow, so as long as something is “factual,” it is “accurate” in your view, even if taken totally out of context? Two plus two does equal four, but if there are six elements, and one arbitrarily decides to ignore the other two, the story is fine??? Very odd logic, sir.

The fight shifted venues earlier this year when the Deadline Club named “Hoax” as a finalist in four categories, sparking objections from Friedman, Hartwig, and others who pointed to what they saw as the series’s flaws and called on the club to reconsider. The club then wrote Bloomberg.

According to Winkler’s letter, Paradis on May 5 emailed a four-page memo to Bloomberg with nine “allegations of inaccuracy” and said the club’s research “highlighted parts of the article with incorrect, inexplicable or questionable material.” The issue at this point was whether the stories should be disqualified from the contest altogether.

On May 9, Paradis and other club officials reviewed the stories in a conference call with Bloomberg editors.

In the end, the club took a middle path: it denied the series an award but left it as a finalist. Paradis declined to discussion how the club made its awards judgments but emphasized that the series was not removed as a finalist.

Still, someone has to settle this “error” question. So, ladies and gentlemen, if I could ask you to kindly step behind CJR’s specially reinforced, lead-lined blast barrier: The Audit is going in.

In his August 2007 letter to Bloomberg Markets’ Henkoff, Hartwig lays out several alleged errors, including one that is indeed a flat mistake: Bloomberg said the storm killed “more than 16,000” people when the figure was closer to 1,600.

Bloomberg agreed and corrected it in the text (though it doesn’t note the correction online).

The rest are actually disagreements, and I’ll handle the closest calls:

Alleged error: Bloomberg said insurers paid out only 55 percent of premiums to policyholders in 2006; Hartwig says the correct number is 65 percent.

The Audit explains: Bloomberg is relying on a figure known as the “loss ratio,” which is the amount actually paid to policyholders excluding various expenses directly associated with the claim, including legal fees, the cost of adjusting and investigating the claim, etc.

Hartwig says it is irresponsible and misleading to exclude these expenses, which also benefit policyholders. I say that Bloomberg language was precise: it was characterizing the amount paid to policyholders. It has a more than reasonable basis for its position (and is not alone in making it), and did not make an error.

Alleged error: Bloomberg said insurer profits since 1994 increased by “an annual average of 46 percent.” Hartwig says the correct figure is 15.9 percent.

The Audit explains: Hartwig believes the appropriate measure is compounded annual growth. Bloomberg took the percentage increase from one year to the next and averaged them all. This emphasizes the large jumps industry profits took from one year to the next.

Bloomberg’s method is unusual, but allowable. It’s certainly not a factual error.


Alleged error: Hartwig says Bloomberg “incorrectly insinuates that states have no prosecutorial power” over insurers.

The Audit explains: What Bloomberg said was that state insurance departments have no prosecutorial powers and that prior to Katrina no state or federal prosecutor had started a criminal investigation of insurer claims handling. The first statement is categorically true, and Hartwig’s letter offers no refutation of the second.

Alleged error: Bloomberg says insurers spent $98 million on lobbying. Hartwig says that figure is an exaggeration because it includes life and health insurers when the story dealt with property/casualty insurers.

The Audit explains: I think this one speaks for itself. Bloomberg never said otherwise. It’s not an error.

Alleged error: Bloomberg said the federal flood program “helped the industry increase profits by 25 percent in 2005, the year of Katrina.” Hartwig says the finances of private insurers are “entirely independent” of the flood program and that what the flood program did or didn’t do could not have an impact on insurers’ profits.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.