The Bombay High Court has pointed out that when an insurer accepts a request to port a health insurance policy and receives the premium, it is presumed to have conducted the necessary due diligence and to have taken an informed decision based on the insured’s entire medical and claim history.
The Court said that the regulatory framework for portability under the IRDA Regulations places the onus on the new insurer to obtain the necessary information from the previous insurer. If the new insurer is unable to obtain this information (for instance, due to a dysfunctional portal), its recourse is to reject the porting request, not to accept the policy and later repudiate a claim on the grounds of non-disclosure of information that would have been available in the previous insurer’s records.
Therefore, the Court ruled that, by accepting the policy, the insurer waives the right to later claim ignorance of the insured’s history, and the burden of information exchange between the two financial institutions cannot be shifted back to the insured. Hence, the Court refused to interfere with the Impugned Award of the Insurance Ombudsman, finding it to be a well-reasoned award in perfect consonance with the statutory and regulatory framework.
A Single Judge Bench of Justice Somasekhar Sundaresan examined the legal framework for portability under Regulation 17 and Schedule-I of the Insurance Regulatory and Development Authority of India (Health Insurance) Regulations, 2016 (IRDA Regulations). It observed that these regulations provide a clear framework for the new insurer to make an informed decision, placing a responsibility on the prior insurer to furnish the requisite data through the IRDAI web portal within a stipulated time.
The Bench noted that the new insurer’s 15-day deadline to accept or reject the policy begins only upon receipt of this data; if information is not received, there is no obligation to accept the porting request. The Bench found it ‘inexplicable’ that Care Health agreed to port the policy without the information being available, stating that if the portal was dysfunctional, Care Health could have simply rejected the request on the grounds of not having received the necessary information.
The Bench opined that accepting the porting and the premium, and then later claiming ignorance, militates against the regulatory concept of a hassle-free ‘migration’ for the insured. The insured is entitled to believe that the new insurer has made an informed decision. The Bench emphasized that blaming a dysfunctional portal is not an excuse, as Care Health was expected to exercise the highest degree of professionalism and could have reached out to Star Health directly if the portal was non-functional.
Briefly, the case involves Haresh K. Joisar, who was initially insured with Star Health and Allied Insurance Co. Ltd. He had a disclosed history of non-healing patches on his tonsils, which were diagnosed as carcinoma, for which he underwent chemotherapy in 2021. Claims for this treatment were honoured by Star Health. In January 2022, the insurance policy was ported to the Petitioner, Care Health Insurance Limited, with coverage commencing from January 13, 2022. Subsequently, the insured’s wife lodged a claim for his hospitalisation, which Care Health repudiated on April 25, 2022, citing non-disclosure of the pre-existing carcinoma.
The matter was brought before the Insurance Ombudsman, who, in an award dated May 7, 2024, ruled that the onus of ascertaining the insured’s entire claim history during porting lies with the new insurance company. Care Health challenged this award in the High Court, arguing that the portal designated by the IRDA for sharing information was dysfunctional, and therefore, the insured had a duty of utmost good faith to disclose the medical history again.
Appearances:
Advocates R.S. Vidyarthi, Mohit Turakkia, and A.S. Vidyarthi, for the Petitioner
NA, for the Respondent
