It is a settled legal principle that an insurance company can sue on behalf of its insured.  It is a claim that arises out of a contract of indemnity insurance concluded between the insurer and the insured.   This means that the insurance company steps into the shoes of the insured.  Put differently it is the substitution of one party for another as creditor. 

This is known as a principle of subrogation in insurance law.  

In order for an insurance company to sue on behalf of the insured, a valid insurance contract should exist between the insurer and the insured.  

This means that the insurer will accept the risk (loss or harm) on behalf of the insured if the uncertain event or peril materializes.  

Subrogation as a doctrine of insurance law embraces a certain set of rules providing for:  

(a)  Reimbursement of the insurer which has indemnified the insured under a contract of indemnity insurance;

(b)  Rights must be susceptible of subrogation, i.e. the insurer can claim subrogation only if the insured has a right against Third party such as a right to claim for damages arising out of the accident.  

Provided that all requirements are met, the doctrine of subrogation becomes operative and it entails that:   (a)  The wrong doer (Third party) is not entitled to benefit from the fact that the person wronged was insured

(b)  The insured may not be enriched at the expense of the insurer by receiving both indemnity insurance and damages from the wrong doer.  However double indemnity is a principle that is contrary to public policy and as such the insured will not be permitted to retain both payments.

(c)  The insured is subrogated by the insurer which entitled the insurer to claim the loss from the wrong doer.  

As it stands in South African Law, insurer could in terms of the doctrine of subrogation proceed against third parties in their own names.  Prior to the evolution of the law to that point an insurer had to sue the third party through the insured and thus did so in the name of the insured.    

Reference list:   -       ACKERMAN v LOUBSER 1918 OPD 21 -       RAND MUTUAL ASSURANCE COMPANY LTD v ROAD ACCIDENT FUND 2008 (6) SA 511 SCA -       SMITH v BANJO 2011 (2) SA 518 (KZP) [2011] 2 ALL SA 577 (KZP)