Journalism Mag Backs Bloomberg's "Hoax"

For years, Columbia Journalism Review has called attention to good reporting while skewering what it considers bad journalism in its “Darts & Laurels” column. Unfortunately, I believe the CJR organization deserves a “Dart” for dismissing complaints by me and the Insurance Information Institute about the accuracy and fairness of the “The Insurance Hoax”–the hatchet job in the September 2007 issue of “Bloomberg Markets” about the industry's claims-handling practices.

CJR reports that Bloomberg raised a ruckus after I complained to the New York City Deadline Club (of which I am a member and a past award judge) when I heard the article had been nominated for an investigative journalism award–in honor of the heroic Daniel Pearl, no less!

Citing misleading statistics in the article and complaining about its one-sided, broad-brush portrayal of the industry's claims performance during Hurricane Katrina (and beyond), I urged the Deadline Club to reexamine the nomination, which they did. (To read the Bloomberg article, click here.)

The article did not win any Deadline Club awards–although, much to my chagrin, it was cited later on by the New York Press Club, with its award for consumer reporting. (I am not a member of that club and did not know the article had been nominated there, otherwise I would have protested to that group as well.)

In any case, this started a whole brouhaha.

On May 27, Matthew Winkler, Editor In Chief of Bloomberg News, wrote a letter to Tim Paradis, president of the Deadline Club and an Associated Press reporter, to “express our dismay at the way in which the integrity of the judging was compromised…” (To read the entire letter, click here.)

Mostly, they were upset about industry officials, both named (like Bob Hartwig, president of the Insurance Information Institute, who has been engaged in a nearly year-long battle with Bloomberg over the article's tone and accuracy) and others unnamed.

However, they also were pretty pissed off at me, citing my April 3 blog decrying the nomination and urging readers to protest to the Deadline Club.

“Friedmans campaign had an impact,” wrote Mr. Winkler, who 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–with many of the you 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 NU's 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 and loss control services to prevent 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–just as any reader would.

Of course, Bloomberg's people and anyone else are welcome to respond to anything I say, right here on my blog. That's what the comment section is for.

This battle–”pitting journalist against journalist,” as CJR characterized it–was detailed in an July 8 onlne CJR column by Dean Starkman. As part of his “audit,” he solicited my take via e-mail, and we had a rather lively but polite exchange. He also spoke with Bob Hartwig to hear out his complaints about the facts supporting the story.

Unfortunately, Mr. Starkman concluded that “a review by 'The Audit' found no significant factual errors and no errors at all involving the insurance industry. The [Insurance Information Institute's] allegations are unfounded.” (You can read his entire post by clicking here.)

In his posting, he reported that “…where I saw strength, critics saw weakness. They believed the story lacked balance and unfairly used anecdotes, even if true, to tar an entire industry.” A point-by-point rebuttal by Mr. Hartwig and my blistering critique failed to convince him about the article's shortcomings.

That's really too bad. We'll just have to agree to disagree.

Mr. Starkman quoted me extensively in his piece, noting that: “In an e-mail to me, Friedman says that if he influenced the [Deadline] Club, 'so be it.'

Indeed!

He also went on to quote my e-mail in stating my main objection, which was that “…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 areasoften when the cause, wind or flood, was not clear.”

Frankly, I just chalk this up to more of the same–the fact that the bulk of those in the media covering insurance (and assessing the performance of reporters doing insurance stories) just don't understand how this 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 publishing 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.

Mr. Starkman correctly goes on to note that “insurance is a difficult beat that requires immersion in an ocean of obscure ratios and facts and long, grinding arguments over their meaning with an adroit research operation headed by Hartwig, a Ph.D. Suffice it to say that from a career point of view, most business reporters find the beat unrewarding.”

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.

(Mr. Starkman made another interesting point about claims metrics that is worthy of a blog of its own. I'll tackle that point next week.)

I'm sorry Mr. Starkman didn't see the Bloomberg piece my way. Perhaps I'll even be hit with one of CJR magazine's dreaded “Darts”–although I would grudgingly wear it as a badge of honor in this case. 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.