Regulation of the general insurance industry, introduced last year, is costing £400m a year, the Association of British Insurers (ABI) has said.
The body said its members were having to pass on these costs to consumers in the form of higher premiums.
The FSA is reviewing how effective its regulation of insurance has been.
Stephen Hadrill, ABI director general, said: "Many customers feel bombarded with [regulatory] information they do not want."
"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.
