So to answer the question, yes, both are correct. During a fire, long, exposed bolts around the outside of a wafer-style component will heat up first, causing the bolt to loose strength. The remaining piping and gasket loads cause the bolt to stretch and the gaskets will leak profusely. Normally, the only way to get the components to pass the fire test standards is to insulate around the exposed bolts so everything heats up more evenly.
If my choice, I would push back against the "insulation causes corrosion" response. If not generously painted exposed bolting will corrode. Option is to use expensive non-corrosive materials. Paint the bolting then apply insulation is the most cost effective solution. If money is no problem, then only use lug-style components where the bolting shorter and is not exposed.