Ray Webber, a director of the Flat Roofing Alliance and managing director of Anglo Asphalt, said many small firms would be forced out of business by next spring because they would be unable to afford the premiums.
He said: "I believe that, come about Easter, sites will be stopping because craftsmen are out of business. A lot of people haven't realised what's going to happen yet. We're running headlong into a brick wall."
Webber added that many subcontractors were operating without the employers' liability insurance required by law. He said: "If inspectors went to sites now, and said 'let's see your [insurance] certificate', lots of people wouldn't have it."
The cost of employers' liability insurance has soared as a result of increasing levels of personal injury litigation, the collapse of Independent Insurance last year and reinsurers' losses from the attacks on the World Trade Centre. Scaffolders and roofers have been hit especially hard because they are considered to be at more risk than general contractors.
Manchester-based Cheshire Scaffolds' premium rose 334% from £8900 to £29,700 this year.
Essex-based roof tiling firm Seeco suffered a one-year price increase of 517% from £14,500 to £75,000.
We’re running headlong into a brick wall
Ray Webber, Flat Roofing Alliance
One West Country roofing contractor, which asked not to be named, reported huge increases two years in a row, taking its premium from £7000 in 2000 to £200,000 in 2002.
The insurance crisis among small firms has led the National Federation of Roofing Contractors to consider the establishment of a mutual insurance scheme for its members.
Chief executive Edward Cowan said: "The NFRC is investigating mutual insurance. This is our most important matter on behalf of our members. A number of trade associations have these schemes, and they're very worthwhile. It might be something roofing contractors are willing to consider for the sake of a smoother ride."
A mutual insurance scheme is one that is owned by its members. Any profits are either returned to members or invested in a reserve fund that is used to pay claims in future years.
General contractors are also facing higher premiums, although their increases are not as high as specialist subcontractors'.