Facts: Mr. Haresh Joisar was insured with Star Health and Allied Insurance Co. Ltd. ("Star Health") and had a history of disclosed non-healing patches on his tonsils, diagnosed as carcinoma, for which he underwent chemotherapy in 2021. His policy was later ported to Care Health Insurance Limited ("Care Health"). A claim was lodged under the ported policy, but Care Health repudiated it, citing non-disclosure of carcinoma. Care Health argued that the Indian Insurance Bureau (“IIB”) portal, used for sharing information during porting, was dysfunctional, and they were entitled to full disclosure from the insured.
Procedural Posture: Care Health challenged the Insurance Ombudsman's award via a Writ Petition in the High Court of Bombay, arguing against the Ombudsman's finding that the onus of ascertaining the entire claim history lies on the insurance company during policy porting.
Issue: When an insurance policy is ported from one insurer to another, does the responsibility lie with the new insurer to diligently obtain the insured's complete medical and claim history, or can the insurer reject a claim based on non-disclosure if the IIB portal was dysfunctional?
Holding: The High Court dismissed the Writ Petition, upholding the Insurance Ombudsman's award. The Court held that Care Health, having accepted the porting request and premium, cannot disclaim knowledge of the claim history, even if the IIB portal was dysfunctional.
Reasoning: The Court reasoned that the regulatory framework for insurance policy porting entails a standard of diligence from the new insurer. Regulation 17 of the IRDA Regulations provides a framework for insurers to obtain necessary information. The court emphasized that Care Health could have rejected the porting request if the IIB portal was indeed dysfunctional. By accepting the policy and premium, Care Health was presumed to have made an informed decision. The court stated, "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." The court also clarified that while the insured has a responsibility for truthfulness, the primary responsibility for obtaining information in a porting scenario lies with the insurer.