Recently, the Bombay High Court stepped in to examine whether an insurer can repudiate a claim after accepting a ported policy and premium, citing gaps in medical disclosure. The case put the spotlight on a recurring industry defence, technical failure of regulatory portals, and tested how far insurers can shift responsibility onto policyholders after formally taking over risk.
The controversy began when an insured, previously covered by Star Health for cancer related treatment, migrated his policy to Care Health Insurance in early 2022. Months later, when a hospitalisation claim was lodged, Care Health rejected it, alleging non-disclosure of carcinoma. The matter reached the Insurance Ombudsman, who ruled that once a policy is ported, the new insurer is deemed to have knowledge of the insured’s medical and claims history and bears the onus of due diligence. Challenging this, Care Health approached the High Court, arguing that the IRDA mandated data sharing portal was dysfunctional at the relevant time and that the insured remained bound by the doctrine of utmost good faith to re-disclose all material facts.
The Court rejected the insurer’s attempt to deflect responsibility, holding that the IRDA regulatory framework places a clear duty on the incoming insurer to make an informed decision before accepting portability. The Court delivered a sharp rebuke, observing that “it is inexplicable that Care Health agreed to port the policy and accept the premium without the information being made available” and that insurers cannot blame a portal breakdown after consciously taking over the risk.
Emphasising that portability is meant to be “hassle free” for policyholders, the Court held that once the insurer accepts the policy and premium, it cannot later disclaim knowledge of prior medical history. Consequently, the writ petition was dismissed, and the Ombudsman’s award was upheld.
Case Title: Care Health Insurance Ltd Vs. Manjula Haresh Joisar And Anr,
Case No.: Writ Petition No. 9028 Of 2024
Coram: Hon’ble Justice Somasekhar Sundaresan
Advocate for the Petitioner: Adv. R.S. Vidyarthi, a/w Mohit Turakkia, i/b A.S. Vidyarthi
Advocate for the Respondent: None
Read Judgment @Latestlaws.com
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