Speaking to The Financial Express, GIC managing director BD Banerjee said that the scheme, currently being referred to as Savings Linked Insurance Scheme, would be a long-term one with a maturity period between 5-10 years (to be decided upon soon). The scheme would offer the customary contingency cover which in this case is likely to be accident cover.

However, this would also come with an additional savings component offering an assured rate of return--which is currently being worked out--with the possibility of yet another additional dividend, if market and investment conditions are good.

Apart from the customisation aspect, the thrust on long-term schemes--some of which are expected to figure prominently among the offerings made by all non-life players (both the existing ones as well as the new entrants)--should enable them to copesomewhat with the possibility of non-renewal in an era of competition. Non-life schemes are typically of one year maturity.

As in the case of life insurance policies, a policy holder of such schemes would be entitled to the savings component even if there is no contingency.

According to sources at GIC, the scheme is being launched as a response to a long-standing demand by a section of personal policy holders for an insurance-cum-savings plan where part of the premium paid comes back to the policy holder as an endowment even when there is no contingency.

Premia in such schemes are slightly higher because of the dual component. Such schemes are popular in Japan. The need for improvisation on the part of the public sector insurance companies in India has become an imperative in the wake of the ensuing opening up of the sector.

The scheme will mark a major departure in more ways than one. As of today, none of the non-life schemes in India have a savings component. Another new feature of scheme is thetenure--except for aviation, all other forms of non-life insurance come in the form of an annual contract with an annual premium.

To market innovative schemes effectively, all players are likely to seek recourse to direct marketing through trained intermediaries rather than depend on the existing agent network.

The GIC managing director had made a reference to the scheme while chairing a series of talks on the development of the personal insurance segment in India, at an international insurance seminar, "Insurance in India: prospects and perspectives" hosted in Mumbai by the Insurance Institute of India.