He said: "As companies will need to cut costs to meet the high premiums required for their insurance, this could lead to some downsizing or laying off of staff."
Houston said the crisis had been caused by a loss of confidence in the sector after the collapse of Independent Insurance last year and the effects of 11 September.
He added that underwriters appeared to attach little weight to impeccable health and safety standards and claim-free records.
Firms trading without cover can be fined up to £2500 a day by the Health and Safety Executive.
Earlier this month, construction industry leaders attended a conference held by the Association of British Insurers to tackle the problem.
Insurance experts told construction trade associations and contractors to keep health and safety records up to date to demonstrate their competence to underwriters.