Local government reorganisation hub

When a council is dissolved or merged, its legal responsibilities, including assets, rights, liabilities, and functions, pass to the new authority. These responsibilities are laid out in statutory instruments or local transfer agreements. This includes insurance liabilities and historic claims, which remain even if the original council no longer exists. Clear documentation of where liabilities sit is essential to avoid disputes or uncovered exposure.

While default regulations provide a framework for transferring liabilities, councils often enter into local transfer agreements that allocate responsibilities differently. These agreements can affect how insurance responds, which authority manages claims, and how deductibles or excesses are applied. Insurance teams should be involved early to ensure these agreements are insurance‑aware.

• Claims occurring policies (e.g. Employers’ Liability, Public Liability) will still respond to claims that occurred during the policy period, even if reported later
• Claims made policies (e.g. Professional Indemnity, Officials’ Indemnity) only respond to claims made during the policy period, so run-off cover may be required

Understanding this distinction is essential to avoid uninsured exposures.

Councils should:

• Cleanse and categorise claims by district or geography
• Identify long‑tail liabilities, such as abuse, education, or highways claims
• Preserve historic policies, insurer details, and evidence
• Capture local ‘off‑system’ knowledge, such as spreadsheets, notes, email records

Claims inheritance is one of the highest‑risk areas of LGR, particularly where knowledge is lost.

Poor preparation can lead to:

• Reopened claims with no supporting evidence
• Disputes over which authority is responsible
• Reduced defensibility and higher claim costs
• Increased workload and stress for insurance teams
• Once staff and systems change, this information is often lost permanently. How do you intend to bring different systems together?

Councils need to understand:

• How deductibles/excesses will be funded in future
• Whether there will still be own-handling claims requirements
• How funds (open and closed claims) will be managed

This is a key financial and operational consideration that needs early clarity.

Changes to council boundaries can affect:

• Allocation of claims
• Access to evidence and records
• Defensibility of historic liabilities
• Insurer appetite and excess structures

Early mapping of these impacts helps reduce disputes and cost escalation.

Local authorities will need to consider:

• How will the aggregation or separation of councils’ impact funds (claims & closed), excess structures and insurer appetites?
• What does splitting specialist functions mean for risk and claims defensibility?
• Examples of how boundary changes will affect claims allocation, evidence handing & historic liability

Property portfolios are often:

• Spread across multiple systems
• Poorly documented
• Reliant on risk spread across larger authorities

Under LGR, assets may be split across new boundaries, increasing risk concentration and making some assets harder or more expensive to insure.

Councils can:

• Identify high‑risk and high‑value assets
• Begin baselining COPE data (Construction, Occupation, Protection, Exposure/Value)
• Record where key information is missing or held locally
• Flag assets affected by boundary changes or shared use

Incomplete COPE data is a common reason for no‑bids or restrictive terms at tender.

Councils should:

• Identify all live construction projects early
• Confirm which policies currently apply (e.g. Contractors All Risk)
• Consider whether novation or replacement cover may be required

Construction projects crossing Vesting Day represent a significant insurance risk if not planned for early.

Councils should:

• Identify all shared services (e.g. children’s services, waste, disability services)
• Clarify current insurance responsibilities
• Flag services that cannot easily be split
• Recognise that interim arrangements may increase risk

Shared services often present operational, safeguarding, and insurance complexity during transition.

Councils inheriting new services should begin planning early for:

• Leaseholder arrangements
• Additional claims exposure (e.g. disrepair, mould, abuse)
• Increased administrative and claims workloads

Early visibility reduces the risk of underinsurance and service disruption.

A shadow authority is the interim body preparing for a new unitary council ahead of Vesting Day.

Even if it does not deliver services, insurance considerations still apply – particularly around decision‑making authority, accountability, and continuity of cover.

Depending on local arrangements, councils may need:

• Clarity on how existing policies respond during transition
• Cover for governance and decision‑making activities
• Alignment on communication and approval requirements

Early discussion helps ensure no unintended gaps arise during the shadow phase.

Even without final decisions, councils can take meaningful steps to prepare. The most effective early actions include:

• Cleaning and organising claims data
• Reviewing property and asset information
• Identifying key risks and services likely to transfer
• Capturing insurance knowledge before staff or roles change
• Planning for minimum insurance requirements for Vesting Day

Preparation is less about predicting outcomes and more about avoiding gaps, lost data, and rushed decisions later.

No. Many preparatory activities are structure‑agnostic and can be done safely now, including:

• Claims data cleansing
• COPE data baselining
• Risk and service mapping
• Knowledge capture

Waiting until everything is confirmed reduces the preparation time available which increases the risk of failed tenders, coverage gaps, and claims issues.

Councils find it effective to:

• Frame insurance risks in financial and service‑delivery terms
• Use clear, real‑life scenarios
• Reference sector‑wide guidance and external expertise

Clear messaging helps ensure LGR risks receive appropriate senior attention.

As early as possible. Councils should:

• Engage procurement teams before formal tendering
• Explain the complexity and risk profile of insurance procurement
• Highlight that insurance cannot be treated like standard goods or services

Early alignment helps avoid rushed, cost‑driven decisions that compromise cover quality.

Councils don’t need all the answers to start preparing – but doing nothing is the greatest risk.

Early, practical action reduces pressure, protects services, and improves outcomes for Day One and beyond.