The Creditors of Independent Insurance Group (CIIG) will take legal action to remove the Financial Services Authority's (FSA) statutory immunity from negligence claims.
CIIG chairman Kevin Young said the group had joined with Equitable Life's policyholders worldwide to commission Class Law to investigate ways of making the FSA accountable.
The FSA has been criticised for failing to stop the mismanagement of Equitable Life and Independent Insurance.
"The FSA has admitted it had misgivings over the Independent position as long ago as November last year," Young said.
"Why they kept those fears to themselves is beyond our comprehension.
"Counsel has said that there may be a way of bringing the FSA to account and
I feel it must be right to investigate such possibilities."
Under the Financial Services and Markets Act 2000, the FSA has limited protection from liability in damages for acts carried out in good faith while performing its statutory function.
The FSA could be challenged in the High Court if it was proved it failed to act in good faith.
Class Law partner Stephen Alexander said the FSA's immunity was incompatible with laws in the rest of Europe, where regulators do not have such immunity.
"We'll challenge the law, saying the law in the UK that protects the FSA on negligence claims contravenes European directives," he said.
Young said the CIIG, which was recently joined by a group of Independent's Irish policyholders, would close its membership at the end of December.
The CIIG now has more than 1,000 members.