The Financial Conduct Authority (FCA) has fined five individuals and two firms a total of £15.5m, in addition to banning four of those individuals, for significant integrity and competence failings.
The FCA fined Shay Reches £1.05m following an investigation with the Prudential Regulation Authority into the validity of solicitors' professional indemnity insurance for over 1,300 firms.
Reches, a director at Coverall Worldwide with responsibility for a managing general agent called Aderia UK, has also agreed to pay £13.13m to three insurers.
The regulator said he conducted regulated activities, which were central to setting up and operating insurance schemes, despite not being approved by the FCA to do so.
The regulator said the misconduct contributed to the failure of several insurance schemes as well as to three insurers going into administration.
As a result, the Financial Services Compensation Scheme (the FSCS) has had to pay substantial claims, totalling £12.7m as at the end of 2015.
Reches has also been prohibited by the FCA from performing any function in relation to any regulated activity.
Action was also taken against Colin McIntosh, Millburn Insurance Company Limited, Coverall, Robert Bygrave, Andrea Sadler, Wayne Redgrave and Bar Professions Limited.
Coverall was fined fined £36,800 by the regulator and had its authorisation cancelled.
The firm has been sanctioned for recklessly failing to mitigate the risks to policyholders arising from the contracts entered into by its appointed representative Aderia.
It also failed to take reasonable care to ensure that it established and implemented adequate controls over its appointed representative and failed to arrange adequate protection for client money.
Mark Steward, director of enforcement and market oversight at the FCA, said: "This was a hugely complex case with the FCA liaising with over 20 regulators and agencies around the world.
"Mr Reches' misconduct led to many solicitors and others being left without adequate insurance."
Steward continued: "He treated policyholders' funds and their interests with reckless indifference and his misconduct was facilitated by an absence of proper controls by key persons at important stages of the insurance process.
"The FCA has also taken action against those responsible for poor controls and oversight."