Exchange Rate Protector Qorus-NTT DATA Innovation in Insurance Awards 2025

The Dollar Life Plan enables individuals to safeguard against offshore liabilities, diversify their risk cover, ensure their dependents are protected in a major global currency, help to indemnify medical costs denominated in a foreign currency and pursue international aspirations.

However, exchange rate risk between the US Dollar and the South African Rand means some clients are hesitant to take out a Dollar Life Plan due to affordability concerns when paying a dollar premium from a local bank account. The Exchange Rate Protector was introduced to provide ongoing protection against a weakening or volatile rand, ensuring sustainable and predictable access to the Dollar Life Plan.

The Exchange Rate Protector offers continuous protection against exchange rate fluctuations for whole of life. During the first nine years, clients receive discounted, locked-in exchange rates every three years. At the start of each three-year period, the rate is locked-in at a 15% discount to the prevailing three-month moving average. After the first 9 years, clients continue to receive locked-in exchange rates every three years, ensuring long-term stability and protection for life.

The Exchange Rate Protector ensures clients benefit from favourable exchange rates whilst managing risk. If the exchange rate drops below the locked-in rate, the client receives the lower rate. This effectively means they are rewarded with the maximum discount for rates above the locked-in rate, and ensuring controlled exposure to fluctuations.

This product was developed in response to the growing need for overseas exposure, ensuring individuals have adequate risk controls to meet their international needs. Locally, there is increasing demand for access to global markets, particularly as a result of advancements in medicine and medical treatments. Historically, the Dollar has been both a more stable currency and higher performing store of value relative to the Rand over the long term.

Discovery Life is the only company in South Africa that offers offshore life insurance plans and therefore there is no direct competition for Dollar Life Plans and the Exchange Rate Protector. However, the competition it is competing against is the affordability of local plans.

There were multiple departments involved for this benefit. The actuarial R&D team came up with, designed and priced the benefit. The legal team provided guidance on the different requirements for offshore protection and the systems that would need to be set up to sell offshore risk protection. The systems teams built the benefit to work correctly when clients purchase this benefit.

Since the implementation of this protector approximately six months ago, the rand-dollar exchange rate has fluctuated significantly reaching a minimum of R17.10/$1 and a maximum of R19.10/$1. This significant volatility highlights the value of the protection, ensuring that clients who adopted the policy early were safeguarded against these fluctuations.

Since the launch of this benefit in July 2024, 95% of the Dollar Life Plans taken up have the Exchange Rate Protector.