The Association of British Insurers, (ABI), the insurance trade body has warned holidaymakers who cheat on their travel insurance that they could seriously damage their wealth.

The recession has left more Britons looking for easy ways to get hold of a lump sum, which they can use to take care of their daily financial problems during these strained times. Thus the number of Britons filing false insurance claims has soared.

In 2008, the ABI detected 4,300 false travel insurance claims, that's over 80 false claims per week - worth £5 million.

Details kept on file affect credit provision

According to the ABI, those found making a false claim on their insurance policy may face difficulties in finding cheap insurance and being granted a loan.

The ABI warned holidaymakers that these fraudulent claims are kept on databases by insurers and other financial institutions which can affect credit ratings and therefore result in having a mortgage application or other types of loans rejected.

And with many lenders being more reluctant on who they lend to since the credit crisis began, those found filing a false insurance claim on their travel insurance could be more likely to be turned down in a loan application.

The ABI also stated that these fraudsters will face higher insurance costs in the long run with other insurance policies other than travel insurance, such as home and car insurance as well as facing prosecution.

Nick Starling, director of general insurance and health at ABI said: "Travel insurance is there to cover you if things go wrong, not to pay for the cost of your holiday."

He added that insurers and police forces overseas are becoming increasingly aware of insurance cheats and will be on the look-out for suspicious claims.

He said: "The vast majority of claimants are honest, but the dishonest few are in for a nasty and expensive shock this summer."

Fraud claims remain on file

Head of travel insurance at a price comparison website said: "A fraudulent claim will remain on your credit history for five years, possibly more. This means a dishonest claim for a £200 camera for example, could end up costing a huge amount more additional insurance premiums in the future."

However, while there are those who are taking out travel insurance as a bid to file false claims on their policy, a number of holidaymakers "simply don't think travel insurance for the UK is important," according to Simon Purnell from a travel firm.

According to figures from the Post Office, 23 per cent of Brits do not intend to take out travel insurance when they go on holiday.

However, the firm warned that skipping on insurance "is a false economy" as with the average holidaymaker taking over £1,000 worth of belongings with them, they will end up losing out in the event of having their baggage lost or stolen.

Last year 3 million pieces of luggage went missing in the EU with 1 million never have been retured to their owners.

Rachael Croft, head of travel insurance at the Post Office said: "For peace of mind and financial security, we recommend that every traveller takes out a travel insurance policy to cover them in the event of any problems."