The Bombay High Court has reaffirmed that insurance companies must exercise due diligence before accepting the portability of health insurance policies and cannot later deny claims by citing technical lapses or lack of information after having accepted premiums.
HC Upholds Ombudsman Order
Justice Somasekhar Sundaresan, on January 23, dismissed a petition filed by Care Health Insurance Ltd challenging an order of the Insurance Ombudsman, which had directed the insurer to honour a claim under a ported policy. The court held that once an insurer accepts a request for portability, it is presumed to have done so after taking an informed decision. The detailed order copy was made available on Monday.
Background Of Dispute
The dispute related to a health insurance policy originally issued by Star Health to an individual who had a disclosed medical history of non-healing tonsillar patches diagnosed as carcinoma. The insured had undergone chemotherapy in 2021, and subsequent follow-up treatments had also been covered, with claims honoured by the original insurer.
Policy Ported To Care
In January 2022, the policy was ported to Care Health Insurance under the portability mechanism prescribed by the Insurance Regulatory and Development Authority of India (IRDAI). The ported policy provided coverage from January 13, 2022 to January 12, 2023.
Claim Rejected By Insurer
Following the insured’s hospitalisation during the policy period, his wife submitted a claim under the ported policy. Care Health Insurance repudiated the claim, alleging that the insured had failed to disclose his cancer history at the time of porting.
Ombudsman Rules For Insured
The Insurance Ombudsman, however, ruled in favour of the insured, holding that the responsibility of verifying medical and claim history during portability lies with the incoming insurer. Care Health Insurance challenged this finding before the High Court.
Insurer Cites Data Issue
Before the HC, the insurance company argued that the portal designated by the regulator for sharing portability-related data, maintained by the Indian Insurance Bureau, was not functional at the relevant time. It contended that in the absence of such data, the insured was required to make full disclosures afresh, in line with the principle of utmost good faith.
Court Rejects Argument
Rejecting this contention, the court examined the IRDAI (Health Insurance) Regulations, 2016, and observed that portability is a statutory right available to policyholders, subject to continuity of the policy. The regulations allow the new insurer to accept or reject a portability request after assessing the insured’s past medical and claim history.
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No Blame On System
The court noted that if Care Health Insurance had not received the necessary information, it could have rejected the portability request. Having accepted the policy and premium, it could not later deny liability by blaming system failures.
Petition Dismissed By HC
Justice Somasekhar observed that portability is intended to ensure hassle-free migration between insurers and cannot be treated as a fresh proposal. Finding no infirmity in the Ombudsman’s reasoning, the court dismissed the petition and upheld the award.
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