My research suggests that a national company selling personal lines insurance in all 51 insurance jurisdictions across the country—with agents licensed and appointed to sell insurance in at least two states—spends in excess of $14 million just to license and appoint its agents. In addition, that same company would be required to pay an additional $7 million a year to maintain their agents' licenses.

These figures do not include the significant administrative and personnel costs required to track license renewal dates and report to each state insurance regulator about compliance with continuing education requirements, all of which varies from state to state. Nor does this take into consideration the burden on tax payers who also cover some of the costs associated with the duplicative regulatory system.

Agent licensing is just one example of the many state regulatory costs that can contribute to the cost of insurance. Whether it is through higher insurance premiums or gaps in insurance coverage, these costs can be a barrier to the purchase of a car or a home, or even the creation of a business that has the potential to create jobs and strengthen the American economy.

The National Association of Insurance Commissioners (NAIC), which represents insurance regulators from all 50 states and Washington DC, has worked diligently to coordinate insurance regulation nationally. It has, among other initiatives, tried to simplify agent licensing, streamline approval of select insurance products, and develop model laws governing all aspects of insurance regulation.

Unfortunately for consumers and the insurance system, state participation in these and other NAIC activities is voluntary, and parochial interests often override innovative policy, adding to the complexity of state insurance regulation.

The question becomes what can be done to reform a system that unnecessarily consumes private and public resources that could be put to better use protecting policyholders and investing in the economy. The solution requires careful consideration of federal and state roles and the value of regulatory uniformity. However, there is a unique and timely opportunity to modernize insurance regulation as part of the new emerging architecture of financial regulation.

Last year, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Congress recognized the need to enhance consumer protections and ensure financial stability within the insurance industry by creating the Federal Insurance Office. The office, housed at the Department of Treasury, is designed to advise the Secretary and report to Congress on the existing regulatory system and how best to modernize and improve insurance regulation.

In today's difficult economic climate, dominated by a desire to cut costs and increase investment, insurance modernization is an initiative that can improve regulation and save money. Consider the $7 million in additional regulatory costs that just one company could be using to make insurance more affordable and available. That is good for consumers and the economy.