Porting Your Policy? Bombay High Court Affirms Insurer Responsibility in Landmark Ruling

In a significant decision for policyholders, the Bombay High Court has ruled that insurance companies cannot accept a "ported" policy and subsequently deny claims based on the insured's prior medical history. Justice Somasekhar Sundaresan, presiding over Care Health Insurance Ltd. v. Manjula Haresh Joisar , underscored that when an insurer accepts a ported policy, they act with "eyes open" and cannot later blame administrative failures—such as a dysfunctional industry portal—to evade liability.

The Background: A Journey of Migration

The dispute originated when the insured, Mr. Haresh K. Joisar, migrated his policy from Star Health and Allied Insurance to Care Health Insurance in January 2022. Mr. Joisar had a documented history of carcinoma, for which he had previously undergone chemotherapy—facts that were known to his original insurer but became the focal point of a coverage dispute when Care Health repudiated a claim for his subsequent hospitalization.

Care Health contended that the non-disclosure of the carcinoma during the porting process justified their rejection of the claim. They further argued that the Indian Insurance Bureau (IIB) portal, designed to facilitate record sharing between insurers, was dysfunctional at the time, leaving them without full access to the insured's previous medical records.

The Court’s Reasoning: Regulatory Diligence

Justice Sundaresan dismantled the insurer's defense by pointing to the IRDA (Health Insurance) Regulations, 2016. Under these rules, "migration" is intended to provide a seamless transition for the policyholder. The Court observed that insurance companies are sophisticated financial institutions expected to exercise "back to back" diligence when vetting a potential customer.

If Care Health lacked the necessary information due to a technical glitch in the IIB portal, they had a clear regulatory recourse: they could have rejected the porting request based on a lack of information. By instead choosing to "happily accept the premium," the insurer effectively waived its right to later cite prior non-disclosure as a ground for repudiation.

Key Observations

The judgment offers a scathing critique of insurers who seek to have the benefits of business without the associated risks:

• On the duty of the insurer: "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."
• On the standard of care: "The regulatory framework, therefore, entails a standard of diligence from the insurer in taking a view one way or the other on the request for porting. There is no obligation to port the policy and take over the risk without receipt of information from the existing insurer."
• On the presumption of informed consent: "When the insurer accepts the porting request, he does so with eyes open and it is presumed to be an informed decision."

Implications for the Insurance Sector

This ruling reinforces the sanctity of the "porting" mechanism, protecting policyholders from the common practice of insurers accepting premiums for years only to investigate and repudiate coverage at the moment of a claim. For legal and insurance professionals, the message is clear: the doctrine of uberrima fide (utmost good faith) acts on both sides. The insurer's right to underwrite, and their capacity to reject risks they find unacceptable, must be exercised before the contract of insurance is solidified through the acceptance of premiums.

By upholding the Ombudsman’s award, the Bombay High Court has signaled that administrative inconvenience, such as a malfunctioning portal, does not grant an insurer carte blanche to abandon its regulatory responsibilities. The "ported" policy is a binding commitment, and insurers must perform their due diligence—or accept the consequences—at the outset.