Although the survey focused on life insurance, the optional federal charter proposals on the table would apply to both life and property-casualty insurance and are being followed by trade associations.

Ms. Bair released the study, funded by the life insurance industry, at a press briefing here.

Ms. Bair said that the current structure of insurance regulation is resistant to the types of changes needed to improve competition and consumer protection.

She emphasized that state insurance regulators exercise their duties with a high level of commitment and professionalism. However, Ms. Bair said, because the National Association of Insurance Commissioners lacks legal authority over individual insurance commissions, it cannot force agreements on uniform standards.

And even if an agreement could be reached, she said, it would be up to individual state legislatures to adopt model legislation, which they are unlikely to do without their own modifications.

As a result, Ms. Bair said, the current system for product review is cumbersome and inefficient.

Currently, Ms. Bair said, there are on average 208 product filings per insurance department staff person per year. This heavy workload, she said, raises questions about the quality of product reviews.

Moreover, a survey of the five largest states in which life insurers do business shows that the average time for product approval ranges from six to nine months, Ms. Bair said.

This, she added, inhibits the ability of life insurers to modify products in response to consumer demands and impairs life insurer competition with banks and securities firms. Similarly, Ms. Bair said, insurance department staffers have extremely high caseloads for producer licensing.

According to survey data, she said, there are 1,284 new license applications per staffer per year, which suggests that applications may be receiving only cursory review.

Centralized processing, uniform standards and greater staff resources would put a federal regulator in a better position to review producer applications, Ms. Bair said.

Since under current OFC proposals states would continue to collect premium taxes, she added, OFC would help reduce state insurance department workloads while preserving an important source of state revenue.

One problem, she said, is that insurance companies now must devote the bulk of regulatory spending to "front-end" regulation.

Life insurers spend 65 percent of total regulatory costs on front-end regulation, Ms. Bair said, which includes items such as company and producer licensing and product approval.

This leaves only 35 percent for back-end regulation such as financial and market conduct examinations.

By contrast, she said, federal bank regulators place far less emphasis on front-end regulation, particularly in the area of product approval. As a result, Ms. Bair said, state insurance commissions conduct solvency exams much less frequently than do federal banking regulators.

The extra costs of front-end regulation in the insurance industry are particularly hard on smaller companies, Ms. Bair said. Several small companies surveyed, she said, reported they would be more likely to expand to new states under an OFC system because they would not be burdened with the front-end regulatory costs of multiple jurisdictions.

Ms. Bair also challenged suggestions that OFC would lead to regulatory arbitrage in which there would be a "race to the bottom" as states and the federal government compete with each other to attract insurers.

Under the dual banking system, she said, there has been no such regulatory arbitrage, with less than 1 percent of banks per year switching charters.

Finally, Ms. Bair said, a federal regulator could achieve a better integration of life insurance in the development of federal income policy. A federal regulator, she said, may be better equipped to work with federal policymakers on issues such as expanding the availability of annuities to middle income Americans than multiple state regulators.

Insurance groups funding the study include MassMutual, Equitable Life, Lincoln National, Northwestern Mutual, Principal Financial, Prudential and the American Council of Life Insurers. Ms. Bair did not address property-casualty insurance in her study.