The NYPIUA operation, which provides coverage for 56,000 homeowners and businesses, has been put in limbo as the result of an angry dispute between the Republican-controlled State Senate and Democrat-led Assembly over how to legislate insurance issues.

Both sides have approved measures to extend the NYPIUA operating authority, but the Senate version goes further and includes language to restore a New York law that under certain conditions allows auto insurers to change rates without prior regulatory approval.

Yesterday, before the NYPIUA program expired at midnight, the chairman of the Assembly Insurance Committee Alexander "Pete" Grannis, D-Manhattan issued a press release attacking Senate "foolishness," accusing the GOP-led chamber of taking the Fair Plan hostage.

On Long Island, where Hurricane exposure has meant NYPIA is the only available insurer for many, Mr. Grannis said 14,000 policyholders are at risk.

He singled out for criticism Senate Insurance Committee Chairman James Seward, R-Milford, accusing him of including auto insurance in the Senate's NYPIUA measure "to appease his friends in the insurance industry."

The auto insurance provision, he said, would let carriers impose annual premium increases--"possibly as high as 30 percent a year--under a system known as ?flex rating,' which does not require review or prior approval of the state's insurance department."

"With New York's auto premiums already among the most expensive in the nation, this is intolerable and irresponsible," Mr. Grannis concluded.

In response, Duncan Davie, chief of staff for Sen. Seward, said Mr. Grannis is "playing a typical political blame game."

He said the Senate measure extending NYPIUA three years, S3467, is a more "comprehensive package of legislation designed to address the broad availability of property and auto insurance.".

Mr. Davie said the Assembly was taking action on the Fair Plan "and they don't want to deal with the crisis in auto insurance." Senator Seward's position, he said, is that "you cannot address the need for stability in just certain segments without dealing with a bigger need for stability in auto insurance rates across the state.

Mr. Davie said the issue would probably not be resolved until the state's budget is approved. That process is currently snagged in a dispute between the legislature and Republican Gov. George Pataki over proposals to meet a deficit with new taxes.

Once the budget passes, Sen. Seward will discuss the issue, Mr. Davie said, but if Mr. Grannis' position is "'It's the Fair Plan or nothing,' then we'll have to think about that."

Sen. Seward, he said wanted to create a marketplace for affordable insurance by creating a climate where insurers are competing for motorists business. He noted that the Senate measure had gained passage with broad bipartisan support.

According to Mr. Grannis, on several occasions, Gov. Pataki has submitted legislation to make NYPIUA permanent. Bills calling for permanency have been approved by the Assembly for the past five years, but have never reached the Senate floor for a vote.

NYPIUA, according to Mr. Grannis' office, provides basic property insurance coverage for 49,000 homes and 7,000 business owners unable to obtain private insurance.

NYPIUA, on its tape, said as of April 30, "we will discontinue accepting new business applications." The agency said it had discontinued renewal of policies effective April 29.

Mr. Grannis said lacking NYPUIA coverage, there will be a disruption in property sales closings, affecting the banking and real estate industries as well as buyers and sellers.

The Assembly legislation to make NYPIUA permanent was approved unanimously on March 10 (A.4525) and a separate bill to extend its authorization for three years on April 28 (A.30,000).

Fair Plans were enacted in every state pursuant to federal law following the inner-city riots of the mid-1960s. New York and Alabama are the only states that have not made their Fair Plans permanent.

NYPIUA, did not immediately respond to a call for comment. According to Mr. Grannis the agency has 50 or so applications daily. Without prompt action, nonrenewal notices for policies coming up for renewal will be sent out within weeks, he said.

NYPIUA said on tape it will continue to service existing policies.

If history is a guide the NYPIUA will eventually be reinstated. Legislative contretemps have allowed the agency to lapse before- in 1997 for 20 days and in 1998 for five days.