British creditors of collapsed insurer Independent Insurance yesterday set up an action group to win compensation for the "hundreds of millions of pounds" they claim to have lost.

Creditors of Independent Insurance Group, led by a group of insurance brokers, intends to pursue Independent's auditors and actuaries for compensation. The group, which includes the insurer's corporate policyholders, trade creditors and employee shareholders, has instructed London-based law firm Class Law to look into what legal action can be taken.

Mr Kevin Young, managing director of Sussex-based Argyll Insurance, has been named as acting chairman.

He said: "This is an action group which has been set up by insurance brokers to protect the position of their clients following the collapse of Independent Insurance."

He said the group was looking at those they claim should have realised something was wrong. This includes the auditors KPMG, actuaries Watson Wyatt, financial watchdog the Financial Services Authority and even the Department of Trade and Industry.

The group estimates its members are "hundreds of millions of pounds" out of pocket from outstanding claims - which are now unlikely to be paid - as well as the cost of having to take out new insurance policies.

Individual policyholders who have outstanding claims with Independent will have most of those claims paid by the Policyholders Protection Board.

But the insurer's 100,000 corporate policyholders will only have claims for compulsory insurance, such as employer liability, paid by the board. Irish corporate customers will not even receive that.

Other claims will be paid by provisional liquidator Price waterhouseCoopers from the funds available.