Regulation of the general insurance industry, introduced last year, is costing £400m a year, the Association of British Insurers (ABI) has said.
Consumers are being "bombarded" by information, the ABI said
The body said its members were having to pass on these costs to consumers in the form of higher premiums.
The ABI added that consumers now felt "bombarded" with reams of regulatory information when buying insurance.
The Financial Services Authority (FSA) is reviewing how effective its regulation of insurance has been.
"Many customers feel bombarded with information they do not want," Stephen Hadrill, ABI director general, said.
"That deters them from searching out the best deal. Customers need principles-based regulation to ensure a competitive market that delivers a fair deal," he added.
The FSA took over the regulation of general insurance in January 2005.