Insurer IAG has told a Victorian inquiry into the state’s devastating floods last year that high risk communities should consider planned relocation.

In a submission to the Victorian Legislative Council standing committee on environment and planning, IAG said the State Government should work with insurers and the National Emergency Management Agency to identify high risk locations and enlist the Federal Government to devise national guidance on relocations.

“The past few years of extreme weather have shown us that governments and communities facing a high or extreme risk from natural disasters must now start to consider when and how to plan for relocation.

"This is not an option for the majority of communities but is an essential option to those communities at extreme risk,” IAG Group Executive Direct Insurance Australia Julie Batch said.

IAG also called on the Victorian Government to create a household resilience project like that adopted in Queensland and NSW to assist people through buybacks, raising homes above flood land and retrofitting.

The parliamentary committee has so far received about 200 submissions. It will investigate Victoria’s preparedness and response to the October floods covering the Avoca, Barwon, Broken, Campaspe, Goulburn, Loddon, Maribyrnong, and Murray rivers.

It will address factors including government policy, flood mitigation strategies, the contentious Flemington Racecourse flood wall and planning.

“IAG has long advocated for access to higher quality, consistent data that can be shared across industries to help communities understand risk and make quality decisions,” Ms Batch said.

Such a database should be shared with the insurance industry to fast-track community recovery and insurer support.

IAG said the Victorian Government should review land planning laws to ensure resilience to natural disasters.

The 11 recommendations in the IAG submission also support the development of resources to identify, coordinate and manage volunteers across the state.

To assist recovery, governments needed to work with NEMA and the insurance industry to identify clear processes for access to grants to rebuild communities.

Research has shown that for every $10 spent on post-disaster recovery, only $1 is spent on measures to improve the safety of communities prior to disasters, IAG said.

IAG said it had undertaken collaborative research to look at ways in which risk could be mitigated.

“As a large Australian and New Zealand general insurer, we see the devastation of natural disasters firsthand as we help our customers rebuild and recover after a severe weather event,” Ms Batch said.

The committee will have six hearings throughout Victoria between August and October and report by June 2024.