Insurers Obligated to Exercise Due Diligence When Porting Policies; Cannot Blame Portal Failure for Non-Disclosure: Bombay High Court - 2026-01-23

The Burden of Vigilance: Bombay HC Clarifies Insurer Responsibility in Policy Porting

In a significant ruling for health insurance policyholders, the Bombay High Court has clarified that insurance companies cannot shift the burden of disclosure failures onto the insured once they have accepted a request to "port" (migrate) an existing policy. Justice Somasekhar Sundaresan, presiding over the case of Care Health Insurance vs. Manjula Haresh Joisar , held that an insurer’s acceptance of a porting request must be viewed as an informed decision, backed by the duty of professional diligence.

Case Background: A Disputed Migration

The dispute arose after the late Mr. Haresh K. Joisar migrated his health insurance policy from Star Health and Allied Insurance Co. Ltd. to Care Health Insurance in January 2022. Mr. Joisar had a documented medical history, including treatment for carcinoma, which had been previously disclosed to his original insurer.

Following his death and subsequent hospitalization, his wife filed a claim with the new insurer, Care Health. The claim was denied on the grounds of "non-disclosure" of his prior condition. When the matter reached the Insurance Ombudsman, the decision went against the insurer, leading Care Health to file a Writ Petition before the Bombay High Court. The insurer argued that the Indian Insurance Bureau (IIB) portal, intended to facilitate the transfer of data between insurers, was dysfunctional, thereby necessitating a fresh disclosure from the insured.

The Arguments: "Utmost Good Faith" vs. "Professional Diligence"

Care Health relied on the established doctrine of uberrima fide (utmost good faith), arguing that the insured bears the primary responsibility to disclose all medical history, regardless of whether the policy is a new purchase or a migrated one.

Conversely, the respondent contended that the portability framework under IRDAI regulations is designed specifically to allow for a seamless transition. They argued that the insurer holds the power to accept or reject a porting request and, once accepted, cannot plead ignorance of the insured's claim history if they failed to exercise their own duty of inquiry.

Legal Analysis: The Regulatory Framework

Justice Somasekhar Sundaresan underscored the clear mandate provided by the Insurance Regulatory and Development Authority (Health Insurance) Regulations, 2016 . Under the regulatory framework:

1. Portability is a Right : Regulation 17 ensures that policyholders can migrate from one insurer to another while maintaining credit for previous policy years, provided there is no break in coverage.
2. The Time-Bound Mechanism : Schedule-I of the Regulations outlines a rigid timeframe for data transfer between the outgoing and incoming insurers.
3. Informed Underwriting : The court noted that the incoming insurer has an clear window to assess the risk and, if necessary, reject the proposal if the data is insufficient.

The Court rejected the petitioner’s reliance on precedents like Reliance Life Insurance vs. Rekhaben Nareshbhai Rathod , distinguishing those cases as they did not involve the specialized regulatory framework governing portability .

Key Observations

The judgment clarifies the standard of professionalism expected of modern financial institutions:

> "The insured is entitled to believe that the new insurer had taken an informed decision on accepting the porting request."

> "Having accepted the request for porting and having happily accepted the premium, the breakdown in the IIB portal cannot be the reason for excusing Care Health from exercise of diligence before taking a decision on porting the policy."

> "The proposition is not that the insured has no responsibility... instead, the proposition is that when the insurer accepts the porting request, he does so with eyes open and it is presumed to be an informed decision."

The Verdict: Implications for the Future

The High Court dismissed the petition, ruling that the Insurance Ombudsman’s award was well-reasoned and aligned with the objective of the IRDAI regulations.

The Practical Effect: This judgment serves as a stern reminder that health insurance "porting" is not merely an administrative checkbox. Insurers are expected to exercise "back-to-back diligence" in verifying policy particulars. If an insurance company chooses to accept a premium from a migrating customer without fully accessing their history, they do so at their own risk—they cannot later treat that customer as a "fresh" applicant to evade liability for pre-existing conditions. For policyholders, this provides a vital layer of protection, shielding them from being penalized for the failure of institutions to communicate data accurately during the migration process.