Insurers Cannot Repudiate Claims Due to Non-Disclosure After Porting Policies Without Due Diligence: Bombay High Court - 2026-01-23

Duty of Diligence: Bombay HC Rules Against Insurers Repudiating Claims Post-Porting

In a significant ruling for policyholders, the Bombay High Court has affirmed that health insurance companies cannot hide behind regulatory glitches to repudiate claims after migrating—or "porting"—a policy. Justice Somasekhar Sundaresan, presiding over a petition filed by Care Health Insurance Ltd., held that insurance providers are expected to act with high professional diligence when accepting a new policyholder through the portability framework.

The Backdrop: A History of Cancer and a Disputed Claim

The case involved Mr. Haresh K. Joisar, who had previously been treated for tonsillar carcinoma while insured with Star Health and Allied Insurance Co. Ltd. After successfully porting his health insurance to Care Health Insurance Ltd. in January 2022, his wife later lodged a claim following his hospitalization.

Care Health promptly repudiated the claim on April 25, 2022, citing the insured's non-disclosure of his medical history. The case eventually reached the Insurance Ombudsman, who ruled against the insurer, arguing that the company had a responsibility to ascertain the claims history of the insured during the portability process. Care Health challenged this, claiming that the Indian Insurance Bureau (IIB) portal—used for sharing medical histories—was dysfunctional, and that the insured should have independently disclosed the condition.

The Legal Tug-of-War

The Petitioner, Care Health, relied heavily on the doctrine of uberrima fide (utmost good faith), arguing that the insured bears the responsibility for disclosure. They cited precedents such as Reliance Life Insurance Company Ltd. v. Rekhaben Nareshbhai Rathod , arguing that the burden of accuracy lies with the policyholder.

However, the Court distinguished this case from traditional insurance disputes. Justice Sundaresan noted that the regulatory framework for porting (IRDA Regulations, 2016) is specifically designed to allow seamless migration. "The insured is entitled to believe that the new insurer had taken an informed decision on accepting the porting request," the court remarked, emphasizing that the insurer is a mature financial institution that controls the underwriting process.

Legal Analysis: The Regulatory Standard of Porting

The Court pointed to Regulation 17 of the IRDA (Health Insurance) Regulations, 2016, which mandates a structured process for porting. By accepting the premium and initiating the migration, the insurer is not merely issuing a new policy but is "taking over" the existing risk. If the IIB data portal is unavailable, the insurer remains in the position of power—they possess the right to reject the porting request before accepting any premiums.

The Court established that the statutory objective of "hassle-free migration" would be defeated if insurers could accept premiums, skip verification, and later retrospectively cancel cover based on information they should have verified at the outset.

Key Observations

The judgment offers a clear directive to the insurance sector regarding the standard of care required during policy transfers:

• "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."
• "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."
• "Care Health was expected to be diligent in reaching out to Star Health if the portal was not functional to take over the records including claim history."

Final Decision and Implications

The Bombay High Court dismissed the petition, upholding the Insurance Ombudsman’s award. By doing so, the Court has effectively shifted the burden of diligence onto the insurer to verify medical histories effectively before finalizing a porting agreement. For insurance companies, the message is clear: if you choose to port a policy without complete information, you do so with your "eyes open," and you cannot later scapegoat the policyholder for systemic technical failures.