In the unlikely event that my husband stages his own death in a canoe accident, I will be straight on the phone to Anne Darwin. How, I will ask, can I persuade him to stay dead and not pop up in a police station, lungs pumping and blood streaming through selfish veins? How can I pull sufficiently sad faces to dupe my children into believing that their dad is a dead dad, yet find the energy to plan an eco-resort in Paradise?

The tortuous tale of the Darwins and the canoe fatality that never was, ended this week with Mrs Darwin being stripped of her assets of £591,000. Failure was not her fault. Without her husband’s unexpected reappearance, she would have got away with it, and would have been, to quote from her husband’s e-mail, “a filthy rich gringo”.

But the question I would most want to ask Mrs Darwin is a simple one. How the hell did you get not one, but two, insurance companies to pay out on their policies in the first place? Therein lies evidence of a true criminal mastermind at work. Squeezing a payout from an insurance company takes cunning, luck and attention to detail. We mere law-abiding consumers are ill equipped to take on the industry and win.

Even if I managed the sad faces and to keep my husband inert and hidden, when I went to claim on the insurance there would be a hidden catch. A failure to disclose an unrelated ingrowing toenail, perhaps. A clause in the small print stating that all canoe-related claims are only payable in leap years.

We have all been so busy hating banks that we have let insurers bumble on to the high ground in the hierarchy of financial morality. Yet this industry is like the hydra; lop off one mis-sold policy and up springs another vile product designed only to create infinitely wide margins for both maker and middle-man.

The recent history of the sector is characterised by slow leakage of scandals: endowments, pensions, dud with-profits funds, protection policies. The Financial Ombudsman Service says that 39 per cent of the complaints it has received over the past seven months relate to insurance products.

The head of the hydra causing most grief at present is payment protection insurance (PPI). These are policies typically sold with loans — mortgages, credit cards or store cards — designed to protect against illness or unemployment. They are designed by insurers, sold by bankers. You could guess just from this unholy alliance that they would be rotten — and you would be right.

In January the Competition Commission decided after a lengthy investigation that PPI was a joke. There is a reason why that nice man at the bank was so keen for you to take out a PPI policy with your personal loan — typically the commission paid is up to 80 per cent of your initial premiums. And it doesn’t work. The report found that typical claims ratios — the percentage of money taken in that is paid out to claimants — were a mindbogglingly low 14 per cent. Compare this to typical claims ratios on motor insurance of 78 per cent, and on property of 54 per cent. So insurers pay out £14 for every £100 taken in premiums. The rest is commission and profit. It’s a mark-up to make a maitre d’ blush for shame.

The commission insisted that PPI could no longer be sold at the same time as a credit agreement or loan. Since the commission’s report, margins have narrowed slightly. But take a wild guess at what insurers did when unemployment started to soar? Yes, they ratcheted up premiums and cut payouts to existing customers, just as they might need to claim.

PPI trades on our most basic instinct — to protect ourselves. We have built cities, worshipped Gods and spun financial webs all in a desperate attempt to protect us and our families from nature and fate.

Once, we were closer to life’s fragility. Mr Caveman knew that boils meant plague and there was nothing he could do about it. Mr Modern Caveman pays the State and the insurance industry a hefty premium to protect him. Sometimes, it works. Yet even plague would be insufficient to make Mr Caveman’s PPI payout. “Sorry, sir, bubonic plague and Black Death are specifically on our list of excluded illnesses.”

PPI is difficult to sell at any time other than when a loan is made. The questions “Do you want to borrow more money than you can conceive of to buy a house” and “Do you want peace of mind with that” seem to generate sales in a not altogether surprising way.

Aggrieved by the commission’s ruling, Barclays challenged it. Last month the Competition Appeal Tribunal found partly in its favour, forcing the commission into a six-month review. Barclays declared this a victory for consumer choice. Indeed, for those consumers who choose to be duped by the banks and insurers this is a triumph.

But herein lies a wider cautionary tale about insurance and banking. Much of their profits depend on patsies subsidising canny consumers. We get free banking, although it costs money to send us chequebooks and plastic cards. The banks are not charitable institutions. Free bank accounts are subsidised by the commission on PPI, by unauthorised overdrafts and by the fees paid by those who can’t manage their credit cards properly.

The general insurance sector pays out £21 billion a year in claims, and takes in £33.8 billion in premiums. The odds are stacked against you no less than if you took your redundancy cheque to a casino and played black-jack. The insurance equivalent of counting cards can help — reading the policy. The industry likes home insurance that won’t pay out because the back window was open, even though the thieves kicked the front door in. So shut the window.

They also aim to get you on the useless policies. After the crackdown on PPI, the banks’ tactics have changed. Times Money reports rising concern about customers being told that they can cut the cost of protection insurance by moving to a new type of policy — the terminal illness policy. This pays out only if you have 12 months to live and is sold alongside life insurance. It is practically impossible, despite a crowded field, to imagine a more useless insurance policy. Here’s a lump sum, enjoy! Oh, yeah, sorry; you’re dying. And your life policy will pay out to your dependants anyway. Probably.

It’s an industry stuffed with scams and scammers, who delight in jargon designed to exclude. Insurance capitalises on our fears and our laziness. They know that we can’t be bothered to read the small print. And they are laughing at us.

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