Safiya Malik

The High Court of Bombay, Single Bench of Justice Somasekhar Sundaresan declined to interfere with an Insurance Ombudsman award that faulted a health insurer for repudiating a hospitalisation claim under a ported policy on the ground of non-disclosure of a prior cancer-related history. The dispute arose after a policyholder shifted coverage from an existing insurer to a new insurer, which later rejected the claim citing nondisclosure. The Court held that when accepting portability, insurers are expected to apply high standards of professionalism and diligence by independently obtaining and verifying the insured’s medical and claim history through the prescribed portability mechanism or by approaching the earlier insurer and cannot shift that responsibility to the customer after accepting the porting request and premium.

The dispute arose from a health insurance claim repudiated after a policy was ported from one insurer to another. The insured had earlier been covered under a health insurance policy with a previous insurer, during which period a medical condition involving carcinoma of the tonsils had been disclosed, treated through chemotherapy, and related claims had been honoured. Subsequently, the insured sought portability of the policy to another insurer under the regulatory framework governing health insurance portability.

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The policy was ported and coverage commenced for the relevant policy period. After the insured’s hospitalisation, a claim was lodged under the ported policy. The new insurer repudiated the claim on the ground of alleged non-disclosure of the prior medical condition.

The matter was taken before the Insurance Ombudsman, who examined whether, upon accepting a ported policy, the new insurer could disclaim knowledge of the insured’s medical and claim history and place the burden of disclosure afresh on the insured. The Ombudsman held against the insurer and directed settlement of the claim.

Aggrieved by the award, the insurer approached the High Court, contending that the insured had failed to disclose material facts and that the regulatory data-sharing portal was dysfunctional at the relevant time. The challenge required examination of the statutory scheme governing portability under the applicable health insurance regulations.

The Court examined the statutory framework governing portability of health insurance policies and recorded that “Regulation 17(i) is a statutory right to the policy holder” enabling migration from one insurer to another with continuity benefits, subject only to the policy being maintained without break.

While referring to Schedule I of the Regulations, the Court observed that the framework “factors in a clear framework for the new insurer to take an informed decision on whether to accept the ported policy.” The Court noted that the regulations impose obligations on both insurers, including timely sharing of claim and medical history through the prescribed mechanism.

Addressing the insurer’s contention regarding non-functioning of the regulatory portal, the Court stated that “it would always have been open to the Petitioner to reject the request for porting on the premise that it had not received the requisite information.” It was recorded that accepting the policy and premium without verification could not later justify repudiation.

The Court further observed that “such an approach would militate against the concept of ‘migration’ which is clearly a regulatory framework for simply moving from one insurer to another without the hassle of opening a new risk assessment all over again.”

On the burden of diligence, the Court recorded that "Considering the intensity of the promise that insurance companies hold to society, it is must be legitimately and reasonably expected that insurers would exercise the highest degree of professionalism and back to back, diligence in vetting the policy particulars and claim history of an applicant for porting, before accepting or rejecting a request for porting of the policy."

Rejecting the argument that the Ombudsman’s view absolved the insured of responsibility, the Court clarified that “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 Court concluded that “"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. No fault can be found with the well reasoned approach of the Insurance Ombudsman, which is in perfect consonance with the regulatory objective of the IRDA Regulations.”

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The Court recorded that “no intervention is called for with the Impugned Award. The Petition is dismissed. All actions required to be taken pursuant to this order shall be taken upon receipt of a downloaded copy as available on this Court’s website.”

Advocates Representing the Parties

For the Petitioner: Mr. R. S. Vidyarthi, Advocate, along with Mr. Mohit Turakkia, instructed by A. S. Vidyarthi

Case Title: Care Health Insurance Ltd v Manjula Haresh Joisar & Anr
Neutral Citation: 2026: BHC-AS:5149
Case Number: Writ Petition No. 9028 of 2024
Bench: Justice Somasekhar Sundaresan