NU Online News Service, March 1, 2:21 p.m.EST

WASHINGTON–The National Flood Insurance Program hasexpired and been shut down after a lone senator blocked omnibuslegislation that included renewal of NFIP.

The action by Sen. Jim Bunning, R-Ky., caused consternation inthe property and casualty industry, but the National Association ofProfessional Insurance Agents (PIA) said in a statement that theSenate could act to restore the program at least until March28.

Senate Majority Leader Harry Reid, D-Nevada will reportedly seeka $100 billion permanent version of the bill later this week, whichfor procedural reasons Sen. Bunning would be unable to block.

Under a directive issue by the Federal Emergency ManagementAgency Oct. 27 and reiterated on Feb. 25, the effect of the lapseis that the NFIP will not be able to issue new policies, increasecoverage on existing policies or renew expiring policies.

Insurance industry representatives said without NFIP in place,real estate closings could be held up.

The flood program slipped into a technical lapse at midnightSunday after Sen. Bunning placed a hold on a bill that also wouldextend unemployment and COBRA benefits as well as prevent a 21percent cut in fees for physicians treating Medicare patients.

The bill (H.R. 4691) was passed by the House on Thursday byvoice vote.

Sen. Bunning declined to waive his unanimous consent authority.He said that he doesn't oppose extending benefits, but rather heopposes the method proposed to pay for it, which would add to thedeficit. He wants to pay for the extension using stimulusfunds.

This next extension of the reauthorization would be the fourthsince the NFIP originally expired Sept. 30 of last year.

The NFIP has become a political football because House Democratswant to add wind damage coverage to the program as well as reducethe ability of insurance companies to limit their obligation tocover hurricane claims by citing a flood damage exemption.

Those House proposals have failed to secure support in theSenate, but the Senate's version of the legislation would have paidoff the NFIP's $20 billion deficit, most of it from claims thatarose from Hurricanes Rita and Katrina in 2005.

The Senate bill would also seek to reduce the cost of serialclaims from those who live in flood-prone areas, although membersof Congress from Louisiana are opposed to such provisions.

NFIP has been allowed to lapse as concern among legislators overthe ballooning deficit has increased, while worries over stormdamage have decreased somewhat since 2005.

"It's extremely unfortunate that the program expired," saidBlain Reithmeier, a spokesman for the American InsuranceAssociation.

"This is incredibly burdensome for insurance companies andhomeowners alike," he said. "That being said, let's hope MotherNature relents and a retroactive extension is put in placequickly."

Mike Becker, PIA director of federal affairs, added, "While thislapse in the flood insurance program will likely be correctedretroactively this week in the Senate, it is disappointing."

He said "insurance agents and their clients who need floodinsurance are now at a disadvantage. Many real estate transactionsrequire flood insurance, and the NFIP is the sole source for morethan 95 percent of the flood coverage nationwide. We could see realestate closings delayed until this is fixed."

FEMA said in its directive that "if there is a lapse in NFIPauthorization, any hiatus period should be brief, and most of thenearly 5.6 million flood insurance policyholders nationwide willnot be affected."