According to a report in the Independent, law firm Rogers & Co acts on behalf of the insurance industry, and said that Spanish hotels could increase the price of these traditionally low-cost holidays, or scrap them altogether.
Many British tour operators say they have already noticed a number of hotels in the Canary Islands offering half board instead of all-inclusive packages.
Spanish hotels say they feel they are being "taken hostage" by British holidaymakers who make fraudulent sickness claims to profit from compensation.
According to Travel Weekly, David Diez Ramos, of Roger & Davis, said: "Sooner or later Spanish hotels will increase the price or stop selling all-inclusive to Britons.
"British citizens are paying less than £1,000 for a two-week all-inclusive holiday, receiving £2,000 to £3,000 for a claim and you can add £5,000 in lawyers' fees. Hoteliers will move from this sort of holiday."
The company added that all of their sickness claims come from Britons, encouraged to lie by 'rogue companies' looking to make fast cash.
Rogers & Co partner Marie Rogers said: "Hoteliers will pull out of low-cost all-inclusive holidays sooner or later.
"The tour operators' underwriters have stopped underwriting the business. We're angry because there is very little we can do in Spain. The legal fees are crippling.
"The rules have to be tighter. We have [UK claims management company] people camping out at the airport."
The Independent reports that the Foreign Office updated its travel advice to Spain to warn against making fraudulent gastric illness claims. It said: "There have been reports of an increase in holidaymakers being encouraged to submit a claim for personal injury if they have experienced gastric illness during their stay. You should only consider pursuing a complaint or claim if you have genuinely suffered from injury or illness. If you make a false or fraudulent claim, you may face legal proceedings in the UK or Spain."
And tour operators have also warned of the risk. Thomas Cook CEO Peter Fankhauser told the Independent that these questionable claims are a "deeply worrying trend", which holidaymakers are "seduced into making by rogue companies which promise payouts of several thousand pounds".
He added: "If left unchecked, the actions of a minority will have a significant impact on the majority – honest people who save hard for their annual break.
"Companies have to recover the cost of these claims somehow. Sadly, that could mean the price of holidays going up."
Best hotels in the Canary Islands (TripAdvisor)
Best hotels in the Canary Islands (TripAdvisor)
This luxury adults-only hotel was named TripAdvisor's top hotel in its Travellers' Choice Awards 2016. Just 10 minutes from Lanzarote airport, it sits right on the on the beach front and is surrounded by a wide range of leisure and restaurants. Each of the 25 exclusive suites offer views over the Atlantic Ocean surrounded by the comfort and harmony. Visit lanissuites.com for more.
Set in Lanzarote’s most popular resort, this place ticks all the right boxes for sun, sea and sand seekers. The newly refurbished Aqua Suites are a stone’s throw from the hustle and bustle of Puerto del Carmen’s main drag. Everything’s within easy reach, with a beach just a 10-minute walk away and an 18-hole golf course a couple of minutes’ drive down the road. See here for more.
This five-star hotel boasts 57 rooms and suites, all very spacious and elegantly furnished rooms with views of the golf course and pool. Sun terraces, an acclimatised swimming pool, a spa and a gym are just some of the things that allure guests here along with its immaculate golf course. Visit hotellasmadrigueras.com for more.
In the heart of the lovely town of Maspalomas, this five-star hotel is designed in the Spanish colonial style with 94 rooms located in small two-storey villas. Interior design was created by the prestigious French architect Alberto Pinto. TripAdvisor reviewers rave about this 'oasis of peace and tranquility.' For more, visit grand-hotel-residencia.co.uk.
This small flagship hotel situated on the coast, in the old town of Corralejo, was fully refurbished in 2013 and boasts a relaxed atmosphere with simple, tasteful rooms. There's a spa and a solarium as well as a wonderful roof terrace with 'wonderful' views across the sea, as well as a restaurant on the breakwater. Adults only. For more, visit avantihotelboutique.com.
With soothing fountains, fragrant flower-filled passageways and spectacular sea and mountain views, this small exclusive resort features "beautifully decorated" villas with private pools, unlimited access to a spa, fitness room and squash court. There's a wonderful golf course and each of the 28 individual luxury villas, each with their solar-powered own pool. Visit royalgardenvillas.com.
For real luxury, this adults-only oceanfront complex offers a personalised butler service in all rooms. The outdoor pool has Balinese beds and hydromassage loungers. Each room has a private terrace with ocean or garden views. Visit melia.com for more.
Bahiazul offers all the amenities of a large hotel, but you stay in your own villa, each with a private pool and Jacuzzi and a roof terrace with BBQ. Each villa offers three ensuite bedrooms and inbuilt music systems. Visit bahiazul.com for more.
Set amongst 13 acres of lush gardens, Costa Sal is less than 10 minutes from Arrecife Airport. This clean, spacious and comfortable resort is the ideal place for families, with homely suites, good service and a relaxed atmosphere. Visit costasal.com for more.
This grand, colonial-style hotel boasts three pools and a setting just five minutes’ walk from the beach. Edged by tropical gardens, you'd never know you were so close to all the smart shops and restaurants in Playa Fanabé. Visit adrianhoteles for more info.