Zurich Municipal launches new insurance product to support biggest local government transformation in more than 50 years

Public sector insurer Zurich Municipal has launched a new insurance product designed to support the hundreds of councils across England undergoing local government reorganisation.

More than 200 local authorities are due to be either abolished or merged as part of huge changes to local government which will require the transfer of services, contracts, assets and employees to new authorities over a relatively short period.

Preparations for the new councils will be overseen by shadow authorities created following local elections. Their task is to ensure the new authorities are able to take on all their responsibilities from day one, when the shadow authority becomes the new unitary council in law.

Zurich’s Shadow Authority Insurance has been created to address the needs of these new bodies.  While they may involve teams and assets from existing councils, they are separate legal entities and therefore need their own cover for any people they employ and equipment they depend upon.

The new cover has already been taken up by the two shadow bodies established in Surrey, where local government reorganisation is being fast-tracked, and will be available to authorities across the country as they come into being.

Aside from Surrey, where the reorganisation is due to take effect from April 1st 2027, the new councils are all due to go live on April 1st 2028.

The range of cover available includes:

• Property: While the majority of property assets will stay with individual councils until hand over on vesting day, shadow authorities need cover for assets bought specifically for their purposes, such as laptops, mobile phones and office furniture. This product provides an office package, covering office contents up to £250,000 and computer equipment to £10,000
• Business interruption: Shadow authorities will be working to tight deadlines. Cover can be provided for additional expenses of up to £100,000 which could arise in the event of any property damage claims
• Employers’ liability: Employers’ Liability, as a statutory requirement, will have to be arranged for anyone specifically employed by the shadow authority. Cover can be provided for up to £10m. Council employees seconded to shadow authorities will be covered by their respective councils current Employers’ Liability insurer
• Public liability: Whilst not a mandatory cover, it will provide indemnity, up to £10m, in respect of the Shadow Authorities’ legal liability for injuries to third parties or third-party property
• Officials’ indemnity: Cover up to £1m to protect public officials, board members and government officials against personal liability, legal fees and financial loss for any claims made during the period of cover from the official decisions and duties
• Libel and slander: Cover up to £500,000

Gordon Wilmott, Head of Public Services at Zurich Municipal, said: “These are unprecedented times for many local authorities, preparing for major transformation while continuing to fulfil their vital role delivering essential services to their communities.

“Having spotted the need for a new product to underpin the difficult work of the shadow authorities we have stepped forward to fill the gap. We know this is just the beginning of supporting our public sector partners through the coming months.

“We’ll be using our decades of experience working with local government to ensure we are by the side of all partners and customers going through these changes, offering events, insight and individual consultations depending on what’s needed.”

Other LGR support from Zurich Municipal

The current programme of local government reorganisation will be the biggest local authority transformation in more than fifty years.

Support being offered by Zurich Municipal also includes:

• A local government reorganisation knowledge hub providing guidance and support for council risk and procurement teams via articles, FAQs, case studies and other resources
• A series of webinars addressing key concerns and questions, supported by expertise from ZM and risk experts from Zurich Resilience Solutions (ZRS)
• Individual access to bespoke risk consultation services offered by ZRS, including risk management training to support shadow board members embed risk management in their decision making*

Anyone who wants to learn more or would like to discuss a specific situation can get in touch via LGR@uk.zurich.com.

*A fee may apply for some ZRS services.

Shadow authority insurance: terms and limits

Shadow authority cover is based on the Zurich Select Policy widely used by existing county, district and borough councils, covering “the usual activities of the insured as a public authority.” Cover notes will apply for a 12-month period.

The full range of Select cover is available for the shadow authorities to choose from but the suggested initial package is:

• Property - an office package: Office contents £250,000; computer equipment £10,000
• Business interruption: Additional expenses £100,000
• Employers’ liability: Limit of indemnity £10,000,000
• Public liability: Limit of indemnity £10,000,000
• Officials’ indemnity: Limit of indemnity £1,000,000
• Libel and slander: Limit of indemnity £500,000