Standardisation Prior to or Instead of Information—A Fundamental Criticism of the (European) Information Model for Financial and Insurance Products

Abstract

The following considerations attempt to show that the markets for financial and insurance products can only function if product standards are introduced into the markets, comparable for instance to the DIN standards we know in nearly all areas of technology in Germany. The introduction of standardisation is a necessary step for mass products such as financial and insurance products. Only then will it make sense to give additional and more detailed information, to ease and complete the product choice and the decision-making process. My thesis is: Standardisation prior to information—and not: Standardisation instead of information. That is to say the providing of information will always be an important requirement for a viable market for financial and insurance products. But if we do not succeed to implement standards, which virtually “guarantee” a high product quality, the information model will not be able to fulfil its function, simply because an absolutely essential condition for this model is missing: the assurance of a high quality by means of standardisation before information. This results in an ever increasing amount of complex information and ultimately in an “information overload”, which does more harm than good to the market itself as well as its participants.