Insurers Must Exercise Due Diligence Before Accepting Ported Policies: Bombay High Court

Insurers Must Exercise Due Diligence Before Accepting Ported Policies: Bombay High Court

In a significant ruling for policyholders, the Bombay High Court has affirmed that insurance companies cannot shirk their responsibility when accepting ported health insurance policies. Justice Somasekhar Sundaresan, presiding over Care Health Insurance vs. Manjula Haresh Joisar , held that when an insurer chooses to accept a "ported" policy, they do so with full disclosure of the regulatory framework and a duty to perform due diligence regarding the insured's medical and claim history.

Case Background: The Porting Dispute

The conflict arose after the husband of the respondent, the late Mr. Haresh K. Joisar, moved his health insurance from Star Health and Allied Insurance to Care Health Insurance in January 2022. While Mr. Joisar had a prior history of carcinoma, for which he had undergone successful treatment, Care Health repudiated a subsequent claim, citing "non-disclosure" of this history.

Care Health argued that the Insurance Regulatory and Development Authority (IRDAI) portal, maintained by the Indian Insurance Bureau (IIB), had been dysfunctional at the time of porting, preventing them from accessing the full medical history. They contended that under the doctrine of uberrima fide (utmost good faith), the burden of full disclosure remained on the insured.

The Court's Analysis: Regulatory Obligations

The Court turned its focus to the IRDAI (Health Insurance) Regulations, 2016. Justice Sundaresan noted that the regulatory framework for porting is not merely a formality but a structured process to facilitate seamless coverage migration.

The Court observed that:

* The Right to Reject: The regulations grant the receiving insurer a clear window to assess the risk. If the necessary information from the previous insurer is missing or unavailable, the new insurer has the right—and, effectively, the duty—to reject the porting request.

* The Duty of Diligence: By accepting the premium and the policy migration, the insurer is presumed to have made an "informed decision." An insurer cannot accept the commercial benefit of a new policy while ignoring their responsibility to verify the underlying risk—a process effectively bypassed if they fail to wait for necessary data.

Key Observations

The judgment clarifies that the insurer cannot rely on administrative excuses to circumvent the protection provided to the insured:

> "It is inexplicable that Care Health agreed to port the policy and accept the premium without the information being made available by Star Health... [The] breakdown in the IIB portal cannot be the reason for excusing Care Health from exercise of diligence."

> "When the insurer accepts the porting request, he does so with eyes open and it is presumed to be an informed decision."

> "Having accepted the insurance policy and the premium, in my opinion, there is no justification for Care Health to disclaim knowledge of the claim history with Star Health."

Implications for the Future

The High Court’s decision serves as a stern reminder that health insurance "porting" is intended to protect the consumer, not to be a loophole for insurers to deny claims later based on information they chose not to verify.

By prioritizing the "regulatory objective of permitting hassle-free migration," the court has reinforced the principle that insurers must behave as mature, diligent entities. If an insurer opts to take on a risk without conducting the necessary checks—even when external portals fail—they must bear the consequences. This ruling will likely discourage insurance providers from accepting porting requests hastily and then retrospectively investigating for pre-existing conditions after a claim is filed.

The Petition filed by Care Health was dismissed, and the Insurance Ombudsman's initial award in favor of the policyholder remains standing.