Flood fallout: insurers now targeting public sector failure

After KwaZulu-Natal's catastrophic floods in 2022, a landmark R6.5-billion lawsuit sees insurers blaming state bodies for failing to protect infrastructure against worsening climate risks

- By Kara le Roux

Cast your mind back to April 2022 and the devastating floods in KwaZulu-Natal. Public infrastructure, homes and businesses buckled under severe floodwaters that caused billions of rands in damage and hundreds of deaths.

Flood damage at Toyota's manufacturing and assembly plant in Durban halted vehicle production there for four months.

In the aftermath, Tokio Marine & Nichido Fire Insurance, the insurer for Toyota South Africa Motors (TSAM), paid out — and then turned its attention to those it holds responsible.

The Japanese insurer is now trying to recoup a collective R6.5-billion from the eThekwini Municipality, the KwaZulu-Natal Department of Transport and Transnet. It is claiming negligence, specifically the failure to maintain flood prevention infrastructure.

“It is important to note that the litigation proceedings are not being facilitated and/or funded by TSAM,” said Tasneem Lorgat, the general manager of marketing and communications at TSAM. “Accordingly, TSAM will not benefit in any way from the subrogated recovery action against these entities.”

If successful, this case could change how insurers manage climate risk and who they hold accountable for damages related to climate change.

Insurers vs incompetence