In addition to allowing the NFIP to secure reinsurance coverage from the private market, the law requires a reinsurance assessment report to Congress no later than 12 months after the date of enactment. The report will include, among other things, an assessment of the capacity of the private reinsurance, capital and financial markets.

The law also calls for the NFIP to conduct an annual assessment of its claims-paying capacity, including the role private reinsurance could play.

Frank Nutter, president of the Reinsurance Association of America, says, "The RAA has consistently lobbied for the NFIP to address its volatility, exposure to extreme events, and significant dependence on taxpayer-funded federal debt through risk transfer to reinsurance and capital markets."

Nutter adds, "we are extremely pleased with this outcome and the significant market opportunities for reinsurers."

The final NFIP reauthorization bill rejected proposals that would have wiped out the program's debt, which most people acknowledge is beyond the ability of the program to repay, while at the same time keeping rates affordable for those most in need of flood insurance.

Besides the reinsurance provisions, the final bill seeks to deal with the program's cost issues by requiring FEMA to establish a new reserve fund in a separate Treasury account and maintain a balance of at least 1 percent of the total program's potential loss exposure to decrease the likelihood of future borrowing from taxpayers.

It also requires FEMA to submit a report to Congress on various options for eliminating the NFIP's outstanding debt within 10 years, as well as create a repayment schedule for retiring that debt and report on its progress towards that goal every six months.

The NFIP was reauthorized, ending a legislative effort that began in 2007, through legislation included in the H.R. 4348, the Surface Transportation Extension Act of 2012.