Simple probability then gives a failure rate of 3%. I have not attempted the Bayesian analysis.
To build credibility you have to admit failure. You can't just omit the bad news while focusing on the good news. You can't allow rumor and speculation to be your spokesperson. There's no way around the fact that an engine failure led to the failure of their secondary mission. Test platform or not, fully insured or not, an expensive piece of hardware became a shooting star. Someone didn't get what they paid for.
How it was handled was seriously amateurish. It made me cringe because I really want to see SpaceX (and Musk) succeed. Shit happens, but how you respond to that as an organization defines you for better or worse.
The satellite burned up when it burned up. It was very probable that it was going to have a short life, but no one really knew how short until re-entry was imminent.
Who do you license orbits from?
The risk was almost certainly overstated, but NASA is understandably paranoid about things hitting the ISS.