To be honest, the Direct Line woman I was speaking to was a shocked as I was. She had to double-check with her supervisor and actually sounded embarrassed when she said they couldn't insure me.
I have a friend who has insured his Citroen Saxo as completely stock but I know for a fact that it isn't. He admits that the reason why he doesn't declare his mods is because of the additional expense. I just hope he never has to make a claim.