Unscrupulous British tourists and claims firms are costing the holiday industry millions of pounds by making fraudulent allegations of sickness while abroad.

According to leading insurance group Rock, the fake medical claims have cost the industry £40m in the last 18 months - and the cost of a package holiday could rise by 15% as a result.

Travel association ABTA is now working with the Ministry of Justice to clamp down on the practices of some rogue claims management companies, who encourage tourists to make false claims such as alleging hotel food was not heated properly, exaggerating the length of an illness and pretending other family members were also poorly.

In March, ABTA met with Foreign Secretary Boris Johnson to highlight the negative impact the claims are having on travel companies’ relationships with overseas suppliers, as well as the reputation of UK holidaymakers. As a result, the association was asked to compile evidence about the extent of the problem and the average cost of a claim to present to the MoJ. The Claims Management Regulator has also announced an investigation, while the Solicitors Regulation Authority (SRA) recently launched an investigation to ensure solicitors are not paying illicit fees to claims management companies for referrals.

Tour operators and hoteliers are covered by their insurance against fraudulent sickness claims, which are difficult to prove. But premiums are rising, which are expected to be passed on to tourists in the cost of their package holiday.