LGR presents a significant structural shift for many authorities across the UK. While much of the focus is understandably on governance, service delivery and financial transition, it is equally important, and often overlooked, to consider the implications for claims management and historical liabilities, where the consequences of poor planning may not emerge for many years.
Early, structured planning is essential to ensure continuity, avoid disputes, and maintain effective claims handling before, during and after transition. Without clear allocation of responsibility, robust data management, and aligned financial planning, reorganisation risks creating long-term uncertainty in the handling of legacy claims.
Why claims management should be a priority
Reorganisation often involves:
- The merger of authorities into new unitaries, or
- The splitting of existing authorities, with services and responsibilities redistributed.
In either case, historical liabilities do not disappear. Claims relating to past activity can emerge years, or even decades after the originating event. Without clear planning, authorities risk:
- Delays in responding to claims
- Disputes over responsibility between successor bodies
- Loss of key evidence or institutional knowledge
- Financial uncertainty around reserved or self-retained costs.
Understanding historical liability: The basics
A core principle to maintain is that liability generally follows the legal entity responsible at the time of the incident, not the current organisational structure.
However, in practice, this often becomes more complex:
- Records may sit with legacy systems or former teams
- Staff with knowledge of historic services may no longer be available
- Boundaries may have changed (particularly for highways)
- Legal and financial responsibilities may be shared or unclear post-reorganisation.
Why highways claims are a useful starting point
Highways is often a practical area to focus on when planning for LGR claims transition:
- There is usually clear statutory responsibility for maintenance.
- Claims relating to highways are frequent and well-documented.
- Records such as inspection regimes, repair logs, and asset registers are critical to defence.
In previous reorganisations, disputes have arisen where multiple successor authorities each believed responsibility for a highways claim sat elsewhere, resulting in delayed responses and increased costs. To guard against this, authorities should prioritise:
- Mapping historic highway boundaries to new authority structures.
- Identifying where inspection and maintenance records are stored.
- Ensuring there is clarity on which successor authority will handle outstanding and future claims.
Highways claims benefit from established Section 41/58 defence frameworks, making the evidential requirements well understood compared to more complex liability areas.
This disciplined approach can then be expanded to more complex service areas, such as social care, where liability may be more nuanced and documentation less standardised.
Key planning considerations for authorities
To maintain continuity in claims handling, authorities should focus on the following areas:
- Clear allocation of liability:
Define which successor organisation is responsible for:
- Known outstanding claims
- Incurred but not reported (IBNR) claims – often including long-tail exposures such as non-recent abuse and occupational disease claims, where notification may occur many years after the originating event/exposure
- Document this within formal reorganisation agreements.
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Retention and accessibility of records:
Ensure historic documentation is:
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Preserved securely
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Accessible to the relevant successor authority
This includes: - Claims files
- Risk assessments
- Maintenance and inspection records
- Incident reports
- Employee HR, occupational health, and training records.
Loss or fragmentation of data is one of the most common risks during organisational change and can prejudice the ability to defend claims in the future.
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Continuity of claims handling processes:
Agree how claims will be managed during transition:
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Will there be a centralised claims function, or multiple teams?
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Are existing third-party administrators or insurers continuing unchanged?
Avoid disruption to: - Claims reporting routes
- Decision-making authority
- Communication with insurers and other stakeholders (e.g. Panel solicitors, loss adjusters).
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Staff knowledge and handover:
Capture institutional knowledge from staff before restructuring:
- Known high-risk areas
- Historic claims trends
- Key ongoing cases
- Consider structured handover processes and documentation.
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Insurance and policy alignment:
Review insurance arrangements to ensure:
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Coverage remains clear across legacy and successor entities.
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There are no gaps in indemnity for historic liabilities.
Early engagement with insurers can help clarify: -
Policy triggers
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Aggregation issues
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Responsibilities for long-tail claims.
While operational continuity is critical, the longer-term financial implications of legacy claims can be equally significant.
Self-insured retentions and historical claims
Many authorities operate with self-retained funds or high policy deductibles. LGR raises important questions about how these funds will respond to legacy liabilities.
Key considerations include:
Ownership of reserves
How will existing claims reserves and provisions be:
- Allocated between successor bodies?
- Protected against future claims development?
Funding future liabilities
Authorities should assess whether:
- Current reserves are adequate to meet long-tail liabilities
- Additional provisioning is required pre-transition
This is particularly important where long-tail exposures may develop significantly beyond initial reserving assumptions over time.
Governance and transparency
Clear governance is essential to avoid disputes:
- Define how costs will be allocated if claims emerge after reorganisation
- Ensure alignment with finance and treasury teams.
Without robust planning, there is a risk that future claims could place unexpected financial pressure on newly formed authorities and potentially lead to disputes between organisations.
Moving beyond highways: more complex areas
While highways provides a useful framework, other service areas require deeper consideration:
Children’s services / social care
- Long-tail exposure
- Complex liability scenarios
- Sensitive record management
Legacy claims
- Exposure to hazardous workplace substances with risks that are not yet fully understood and may in due course become subject to test litigation (often described as ‘the next asbestos’).
- Changes in the law which may open up unanticipated liabilities (e.g. Lister v Hesley Hall (2001), which expanded the boundaries of vicarious liability).
In these areas, early legal and insurance engagement is particularly important to ensure clarity of responsibility.
Key takeaway
LGR may reshape administrative boundaries, but it does not eliminate the liabilities that sit beneath them. Authorities that take a disciplined approach to claims, data, and financial planning will not only protect themselves from future disputes but also ensure continuity of service and confidence during a period of significant change.