Insurers will be "cracking down hard on insurance cheats" this summer, according to the ABI.
This is in response to a report that nearly half of holidaymakers would not rule out making a fraudulent claim.
Of the 2,000 people polled, the ABI report concluded that 47% of people considered making a dishonest travel insurance claim as "on a par with stealing towels from your holiday hotel".
The ABI said that holiday insurance cheats fell into one of two categories, the serial claimer and the opportunist.
The report cited the case of a holidaymaker who claimed for the cost of having his appendix removed on eight separate occasions.
Meanwhile, one female opportunist claimed her Rolex watch was stolen, only for the police to discover that the watch was in fact in a friend's handbag.
ABI head of financial crime prevention Debra Weekes said: "Travel insurers are no soft touch when it comes to insurance cheats. The industry will be cracking down hard on insurance cheats who see travel insurance as a way of paying for their holiday."