LGR and liability: what local authorities need to consider now

While administrative boundaries may change, liability for past events does not simply disappear. Claims can emerge many years – and sometimes decades – after an incident occurs, making it essential for authorities to consider how historic liabilities will be managed throughout the reorganisation process.

Without clear planning, councils may face uncertainty over responsibility, difficulties accessing records and increased costs associated with defending or settling claims.

Why claims planning matters

Historical liabilities don't disappear when organisations change. Whether authorities are merging into new unitary councils or redistributing services, poorly managed transitions can result in delays to claims handling, disputes over responsibility between successor authorities, the loss of important records or institutional knowledge, uncertainty around reserves and self-insured costs, and increased legal and claims handling expenses.

Taking a structured approach early in the process can help maintain continuity, reduce risk and avoid costly disputes later.

Understanding historical liability

In most cases, liability remains with the organisation responsible at the time of the incident. However, changing boundaries, fragmented records and unclear successor arrangements can make this difficult to determine.

That's why liability planning should form part of wider LGR preparations from the outset.

For many authorities, highways claims provide a practical starting point for transition planning. They are typically well documented, supported by clear statutory responsibilities and reliant on evidence such as inspection records, maintenance logs and repair histories.

Mapping historic responsibilities, identifying where records are held and agreeing future claims ownership can help establish a framework that can later be applied to more complex service areas.

Key considerations for authorities

To help maintain continuity and avoid future disputes, councils should focus on five key areas:

1. Clarify responsibility

Agree which successor authority will be responsible for existing claims, future claims relating to historic events and long-tail liabilities. Recording these arrangements formally can help reduce uncertainty later.

2. Protect records and evidence

Ensure claims files, incident reports, maintenance records, risk assessments and employee records are retained, accessible and transferred appropriately. Missing records can make future claims more difficult to defend.

3. Maintain claims continuity

Put clear arrangements in place for claims reporting, decision-making and engagement with insurers, solicitors and claims handlers to avoid disruption during transition.

4. Capture organisational knowledge

Document important knowledge held by staff, including ongoing cases, historical incidents and high-risk service areas, before restructuring takes place.

5. Review insurance and funding arrangements

Work with insurers to understand how historic liabilities will be handled, identify any gaps in cover and ensure adequate financial provision for future claims costs. By addressing these areas early, authorities can help ensure a smoother transition and reduce the risk of disputes, delays and unexpected costs.

The financial implications of legacy claims

Many authorities retain a proportion of risk through self-insured funds, reserves or policy deductibles. Reorganisation raises important questions about how these arrangements will operate in the future, including how existing claims reserves will be allocated, whether current provisions remain sufficient, who will be responsible for funding future developments on historical claims, and how any disputes over claim ownership will be managed.

Without clear governance and financial planning, newly formed authorities could find themselves exposed to unexpected costs and financial pressure long after the reorganisation has been completed.

Preparing for a confident transition

Local Government Reorganisation marks a significant period of change, but effective claims management should remain a core part of transition planning.

While highways claims can provide a useful starting point, authorities should also consider more complex areas such as children's services, social care and legacy liability risks. These can involve long-tail exposures, sensitive records, occupational disease claims and evolving legal responsibilities.

By taking early action to clarify responsibilities, protect records, maintain governance and review financial exposure, authorities can help ensure historical liabilities are managed effectively and future disputes are avoided. Although organisational structures may evolve, a well-planned approach to claims and liability management can provide continuity, confidence and resilience throughout the reorganisation journey.

How we can help

Local Government Reorganisation is bringing significant change. Our focus is to support councils through contract transitions, align risk approaches, and help shape insurance arrangements that meet the needs of new unitary authorities.

• For support and insights, visit our LGR hub

Drawing on our experience working closely with local authorities, the hub brings together practical guidance, insights, and resources to help councils and stakeholders understand what is changing, why it matters, and what it means in practice.

If you would like to discuss next steps or need support at any stage, please contact your account manager or email LGR@uk.zurich.co.uk.