DIPLOMA IN ACTUARIAL SCIENCE

FACULTY OF COMPUTER AND MATHEMATICAL

SCIENCES

GROUP ASSIGNMENT:
BEAUTY INSURANCE

NO. GROUP MEMBERS STUDENT ID

1. IZZA AFRIENA BINTI MOHD ILHAMI 2019438418
MARISSA ADRIANNA BINTI MOHAMAD
2. 2019285894
FADZIL
3. NURALYA DINI BINTI MOHD SABRI 2019247818
4. PUTRI SARA DAYANA BINTI AZHAR 2019410346

INTRODUCTION OF ACTUARIAL SCIENCE

(ASC 302)
A4CS1124D

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TABLE OF CONTENTS
1.0 Introduction to Audace Malaysia……………………..………………………………...3

1.1 External Factors of Product Design Cycle..……...………………………………………4

1.2 Reasons to Develop Product……………...……………………………………………...8

2.0 Product Design Process…….…………………………….……………………………...9

2.1 Understand the Needs….………………………………………………………………...9

2.2 Can the Need be Met…………….....…………………………………………………...11

2.3 Design the Product……….....…………………………………………..………………14

2.4 Review the Product Design……………………………………………….…………….23

3.0 Nature of Process………………………………………………………………………..23

4.0 Risk Assessment and Understanding…………………………………………………..25

4.1 Selection………………………………………………………………………………...28

4.2 The Principle of Risk Classification………..…………………………………………...28

4.3 Why Underwrite?............……………………………………………………………….29

5.0 Conclusion.………………………………………………………………………………30

References…………………………………………………………………………………...31

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1.0 INTRODUCTION TO AUDACE MALAYSIA

Diagram 1: Audace Malaysia's Logo

Audace Malaysia is named after an Italian word audace that can be translated into English
which means daring and bold. The word bold and daring can be interpreted as confidence. As
for the logo, the colour selection is a warm tone. We will warmly acknowledge customers with
insecurity and help them gain their highest confidence. It is the charm of Audace that will allure
everyone to join our family because of our compassion.

Audace's first-ever headquarter was located in Kuala Lumpur in 2019. The landmark is
in Kuala Lumpur Convention Centre (KLCC). We wish to expand its wing to every state in
Malaysia. In 2020, Audace was the first in Malaysia to launch a beauty insurance policy with
an affordable premium that everyone can enjoy.

Audace will continue to grow and widen the horizon by introducing more policies and
improving our existing policy to cater to our customer needs. Although we are new in this
industry, together with 60 responsible and well-trained teams, we guarantee that your life will
be safe in our hands. It is an honour to continue improving our company and becoming the best
insurance company in Malaysia.

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1.1 External Factors of Product Design Cycle
i. Key Product Features
According to Oxford Dictionary, beauty is defined as "A combination of qualities, such as
shape, colour, or form, that pleases the aesthetic senses, especially the sight". As from the
definition stated, we are aware that beauty comes from a combination of many aspects such as
shape, colour or form, that is used to pleases the aesthetic senses. Before the '90s and until this
present time, beauty is essential in someone's life. The understanding of beauty maybe changes
from time to time. Still, it is the same concept that shows someone's appearance to other people,
bringing a positive or negative impression. In this context of beauty, we will be focusing more
on someone's physical appearance from the upper part of the body, which is the face. In taking
care of our beauty appearances, there will be beauty treatment that one needs to go through.
Therefore, in every treatment, there will be few risks that one will need to face.

Nowadays, we can see that beauty or physical appearance is something that is important in
someone's life. Having any beauty treatment will have their own risk which one need to face
through. For instance, while doing the treatment, one will have the possibility to encounter any
unforeseen event such as death while doing treatment, the aftereffect of treatment that can cause
death, disable because of the treatment, or any worse scenario. Next, the risk of getting any
side effects from any reason will affect one's beauty appearance. Therefore, to help every
individual in Malaysia without focusing on any gender status, our company decided to
formulate a new product called beauty insurance.

This beauty insurance is created to give protection to someone who is affected by any beauty
treatment. In other words, this type of insurance will protect us from losses that may happen
and get compensation if any unforeseen event happened later. By the meaning of an unforeseen
event that has been stated, their head of the family died or disabled because of any beauty
treatment that they undergo. Other than that, our company will provide any coverage for our
client who is facing any problem that will affect their beauty appearances such as allergic
reaction, rashes, root resorption and many more that is covered under botulinum toxin type A
(Botox), dermal and dental. It can only be claimed if it happens beyond your control, and one
needs to minimise the damage. Now, everyone should not be worried about taking care of their
beauty appearances. Our company will provide the best and friendly product which will satisfy
everyone who used our product later.

ii. Managing the Risk Associated with the Product

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Most of the companies in Malaysia contain risk management departments, and the same goes
for our company, Audace. We also introduce this department before officially announcing our
company. This department is playing a crucial role in our company. This is because this
department will identify and analysed all the possible risks that may happen to the customer
when purchasing our product. All the potential risks will be identified and analysed before our
company announcing this product to Malaysians. This action is taken as we want to ensure that
the product we will provide to everyone is fair to every party. This includes the client, company
and ourselves.

After our risk management department identifies and analysed all the possible risks that could
happen, we will sort all types of risks our company will cover and will not be covered in the
policy. There will be only specific coverage from our company, depending on the situation,
condition, insured's health history, and others. The reason is to avoid any adverse selection
occurring. Beauty or aesthetic function may cause such events, such as side effects after any
beauty treatment that could lead to death or disability. As stated before, beauty is essential in
someone's life; therefore, if any aftereffects such as allergic reaction or root resorption will
affect someone's beauty appearances, this will also be one of the risks that may happen.
Therefore, our risk management team must analyse all the risk that has been mentioned before
and any other risk that could happen to every Malaysians without focusing on any gender. After
the analysing process, every company's coverage will depend on the premium type that the
insured purchase, which contains types of beauty coverage, health history, and types of
function premiums. Other than that, the insured needs to follow the correct process before
claiming. If there is any fraud claim, our company will not anticipate it.

iii. Choosing Distribution Channels

The best way for a company to distribute our product is by using direct distribution and
intermediary methods. We believe that this will help our company promote our product to the
industry in Malaysia better. Before deciding and selecting the type of distributing channel that
our company will be using, our team will study the trend of Malaysians focusing on which
advertising platform more, the age of people who interested in beauty platform and which
channel that is appropriate for our company to splurge our money which will profit back to us.
This is important as we also believe that we will receive more outstanding sales in this industry
for the long term with a better distribution channel.

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Therefore, we have decided that it will come from our company by promoting to others for
direct distribution. Forms that our company will be using is by personalised contact which by
direct email and in this era, there are lots of people which come from different age be using
social media as their communication medium, therefore, it is an excellent opportunity for our
company to advertise our product using this online platform to enlarge our product to
Malaysians. This is because it tends to work better than a direct distributor as we could directly
explain to our consumer.

As for intermediaries, they will be divided into two, which are main and side intermediaries.
As for the main intermediary, we will use sole agents representing our company and selling
our product. Our company will train this sole agent to ensure our agent provides the correct
information to our clients. As for the side intermediaries, we choose beauty and aesthetic
companies such as spa company, botox company, and dental company, which focuses more on
aesthetic and dermal companies. This is because the client who will be attracted to our product
will always visit this company as our product is related to them. Our product can easily be
conveyed or introduced to the client. Other than that, it would be easier for the clients to seek
any advice from the beauty or aesthetic company before purchasing premium from our
company. By using this all kind of method that has been mentioned before, it will help our
company to attract potential customers and purchasing our product.

iv. Formulating market strategies

As for every company, including us, formulating market strategies is very important to create
and develop a suitable approach to attract potential customers and new interested customers to
use our products offered in dermal, botox, and dental products. In order to formulate a
successful marketing strategy, Audace has taken a few measures to achieve our company's
goals and objectives in both the long and short run.

First and foremost, the essential part is to recognise our market and also potential customers.
These can be accomplished by researching and gathering information about the population
statistics in Malaysia in terms of age, gender, family income, and social trends. Our target
market is for all Malaysian citizens but specifically focused on people who require this type of
service or have high beauty maintenance. For example, the modelling industry and acting
industry, they have to look presentable on screen. As the statistical trend will change over time,
we have to estimate the uncertain events to avoid an unfortunate loss to our company and
develop a relevant strategy throughout the period. This is important to obtain information and

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details to understand the customer needs to fulfil them because nowadays the concept of beauty
is shifting as it applies to certain gender or skin colour, but beauty is universal. This shows that
the customer needs will be different from each other based on their preferences and opinions.
Hence, we will have to determine how the different types of market segments will respond to
our products and services offered to them in order to identify new market opportunities and
increase our profit. After taking all the measures, we can conclude that targeted market wants
to have a protection from having any financial losses in the future due to unforeseen events
such as risk of side effects. This is because the average cost of beauty expenses is very high for
someone who is very particular about beauty.

Next step is to recognise our competitors in the insurance industry. Since we are a brand new
beauty insurance in Malaysia, so there is no other beauty insurance for the time being that offer
protection due to beauty treatment negligence for instance that happen during the treatment.
Normally, there is only insurance for the product liability in Malaysia but we are specifically a
beauty insurance for the consumer of beauty aesthetic. Therefore, this will give us the benefits
in terms of gaining customers, widen the range of our products and services in the future that
is customer satisfaction guarantee. However, we might facing slightly competition with life
insurance company as we provide claim for premature death.

The third step is we want to have support to our marketing goals by attracting and increase
awareness of the potential customers of our products through the online and offline platform.
After surveying all the available platform, we will choose to make our own website to advertise
and offer our products directly there as it will be easier for the customers to see the list products
and benefits offered by our company and contact our agent at the website during office hours
or email to us. Another platform that we will be advertised on social media channel by posting
daily updates on Facebook, Twitter and Instagram. This way is more effective as it will be
easily spread and everything is at your fingertips by using mobile technology.

Last but not least is to set a target of a specific limit of revenue, the number of products sold,
or the number of customers that has to be achieved by the employee in a particular department
for every month. The employee who achieves the goals will get recognition as this will increase
the effectiveness and productivity of the employee. For instance, our company will conduct an
employee of the month program to show appreciation and boost their confidence to perform
their work better.
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v. Setting up the administration system
The most crucial part in any company, as much as an insurance company, is having the system
administration setting up to ensure the computer system performs the task run smoothly in
terms of pricing of the premiums, designing products and many more. In the case for our
company, this is the key part as it will have the information and records regarding the customers
and company records for all insurance policy related details saved in the system. For instance,
transaction workflow, to update any policy data and tracking customers premium changes

vi. Assessing capital requirement

In terms of designing a policy, it requires a lot of discussion, review and also feedback from
the supervisor and head of department. As we are designing the product, we have to assess the
amount of capital required for a particular product. Therefore, our company need a huge
amount of capital as the cost of beauty is quite costly. In addition, we have to check examine
and discuss with the ministry of Health for the halal certificate of the product. Hence, the
banking institution will determine the amount of capital required for our company to advertise
and sell the product.

1.2 Reasons to Develop Product

Nowadays, people are concerned about their skin, looks and appearance. Some people have
good skin, but some are still struggling to find the best product for themselves. People will also
spend extra money if something bad happens to their faces, such as breakouts, accident, or
operation failure. This unexpected event will also lead to insecurity and low self-esteem.
Skincare and beauty treatment is super expensive, which not everyone can afford. Therefore,
by developing beauty insurance products, we can help people enhance their beauty and increase
their confidence level.

Our main reason to develop this product is to compete with the existing competitors
such as health insurance in our country. Health insurance covers medical surgery costs, but
beauty insurance will cover any risk of allergic reactions or side effects due to beauty surgery.
This is because people will spend their money on surgery and skincare products. Note that our
skin should be treated as the most fragile organ because it will react to certain ingredients
differently from other skin. There is the risk for some skin to have allergic reactions such as

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acne, red spots on the skin or itchy rash. This allergic reaction will cost a certain amount of
money which is usually high.

Other than that, we want to develop a beauty insurance product to break it into a new
market. As we know, beauty insurance products are insurance that is available in any other
countries but still are not yet available in Malaysia. Indirectly, our company has a possibility
to develop as the new target market in Malaysia. This is clear why Malaysia needs beauty
insurance due to beauty standards changes over time, especially to the people who work in the
entertainment industries, such as models and actors, as they need to be flawless and perfect
every time during shows and gigs.

Lastly, the reason to develop beauty insurance products is new patterns of demand
resulting from demographic changes. Demographic changes can be influenced by several
factors such as age group, relationship status, salary, and occupation. Based on our survey,
there is 59% of the respondent demand for this product. This shows that people have been
exposed to the benefits and importance of skincare which means they care about their beauty
and appearance. By developing this product, we believe it will be able to help more people who
need and are looking for this product.

2.0 PRODUCT DESIGN PROCESS

2.1 Understanding the Needs

Before creating or improving a new product we should understand the needs of our product in
the industry in terms of who should be our target market and why should they be our target
market, where does the idea came from and why does the product that we created is still not in
the industry. These elements are important as this information will guide us on creating the
product later.

i. Who will be our customers and why?

Audace is a company that provide beauty insurance to all Malaysians generally but there will
be groups of people that we will focus on. The group of people that we will be focusing on is
people who need a major coverage regarding beauty and someone who is their profession
depends on beauty appearances for instance modelling and people who work in the
entertainment industry. This beauty insurance will not focus on only one gender as we believed

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that beauty appearances in not a gender based. Therefore, our product will be offer to every
Malaysians.

Based on the pilot survey that has been conducted, 94.5% of respondent believes that beauty
appearances are important and one of respondent agree that this beauty insurance should be
one of the insurances that need to be subscribe by someone who involves in the entertainment
industry as beauty will act as their assets. Other than that, this beauty insurance has never been
introduced before in the industry even though it is important. Therefore, Audace take the
initiatives on creating this beauty insurance. As Audace are still new therefore we will only
provide coverage for any losses that may happen and from any unforeseen event that is only
relates to botox, dermal and dental.

ii. Where the need originate?

Recently, we could see many reports across the news that there are quite a number of people
who died during and after undergoing their beauty treatment such as dental procedure, botox
treatment and dermal treatment. This also involves receives a bad side effects after their
treatment. We do understand that beauty appearances are important therefore one is willing to
pay huge amount of money to undergo any beauty treatment as to take care of their beauty
appearances. But as beauty treatment is a treatment where one need to deal with multiple of
chemical products, internal procedure such as dental treatment and others, therefore one will
need to face high risk such as death and bad side effect during or after the treatment. This can
be proven by the incident of Malaysia's model who died when undergoing one of beauty
treatment which is the liposuction treatment. Who would have thought that someone who just
needed a beauty treatment need to face their death during the liposuction treatment. Therefore,
due to this kind of situation Audace has decided to create this beauty insurance to protect one
from any unforeseen event.

Other than that, lately we could see that few of entertainer in Malaysia who undergoes beauty
treatment by using whitening infusion without any consultation from a doctor who is registered
under the Ministry of Health Malaysia or any authorised representative as to get the instant
whitening without knowing the after effect. This kind of treatment could bring a bad side effect
to someone who receive this whitening infusion. Therefore, also from this scenario we decided
to create this beauty insurance. As we observed that, Malaysian prefer to undergo this kind of
treatment as one will receive an instant solution to get a better beauty appearances.

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Moreover, in this modern era there will be an improvement on the chemical product that will
be used during any treatment by using the latest technology. But every new product that is
created need to undergo the try and error process. Therefore, if one is unlucky and die, disable
or having any bad side effect after receiving the new chemical product even though it has been
approved it will be bad for the individual. Therefore, with this beauty insurance one will at
least receive a coverage, or the beneficiary will at least receive a compensation from the
insurance.

iii. Why is this need not covered yet?

As stated, before Audace will offer their clients a protection if they are affected by any of the
beauty treatment. As we know to undergo a beauty treatment, one need to pay a huge amount
of money as the treatment is quite costly. Therefore, for one insurance company to create a
protection against this kind of treatment it needs to consume a lot of time to study the ways to
offer protection to the client with a fair treatment. By meaning of fair treatment, the product
that is created must be fair to the client, company, and the creator of the product. There are
many aspects need to be look on before creating this insurance. For instance, a company need
to study the side effect that might happen to the client, the type of chemical product, from
which authorised place that the insurance company will only covered and many more.

Next, the price of this product will also be expensive, but it will depend on the package that
one will buy. The reason why the product is expensive is because the protection that one will
receive from our company is also the best coverage. As we wanted to produce the best product
for our client. Other than that, this kind of insurance kind of risky as we can't predict on the
amount of people will be having the same side effects from the treatment.

2.2 Can the Need Be Met

Creating an insurance product might seem to be easy for certain people but remember we need
to make sure that our product will meet all the needs for an insurance to be created and
published in the industry.

i. Financial viability

In Audace, we will offer 3 aspects of protection in beauty treatment that our client will undergo.
These 3 aspects are botox, dental aesthetic and dermal treatment. The amount of product
offered may not be a lot but after observing the trend of people in Malaysia, it safe to say that
Malaysian are more into those 3 kinds of product. The product that Audace offered will be able

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to gain profit as there are numbers of people who are interested in and need protection. This
financial viability is important to our company because making financially viable decisions
will show either our beauty insurance is a successful product to our company or not.

ii. Affordability

The price of our beauty insurance will be at the rate where people are able and afford to buy
our product. We know that the cost of coverage will be formidable because the amount of
compensation and the after-treatment cost, such as rehabilitation cost, will be high. But looking
at the severity and frequency, it is still tolerable as the treatment centre that we will accept is
only the centre that is registered under the Ministry of Health Malaysia or any authorised centre.
Therefore, all the procedure use, chemical use or any other product that will be used during the
treatment is all certified and safe but by saying that, we cannot deny that any unforeseen event
might happen later in the future.

iii. Timing

Beauty appearances have been a hot topic since the early 90's already, but recently we could
see that there are quite a number of people who really into the beauty industry without even
considering the beauty treatment will be harmful or not. Every people would expect a beautiful
outcome after undergoing the beauty treatment and spending a huge amount of money, but the
unforeseen event cannot be predicted which might happen to them. Therefore, this is when
beauty insurance will be needed by the people, especially the one who works as an entertainer
or modelling as their profession. With the help and protection from beauty insurance, it might
at least reduce the loss that will happen.

iv. Legal requirements

In Audace, we understand and take all the requirements of all relevant legislation, regulations,
professional standards, code of conduct and the law that need to be followed seriously. As we
believed that if a company follows all the requirement and understand the needs that are needed
it will avoid us from at least bad downfall and could be a successful company. A few legal
requirements stated by the Ministry of Health Malaysia for the one who will conduct the
aesthetic treatment must be fully registered with the Malaysian Medical Council, must possess
a current and valid Annual Practising Certificate and many more. Therefore, we will follow
and make sure all the legal requirements be met before accepting.

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 v. Fortuitousness

Any occurrence of loss significantly depends on the insured behavioural will create a moral
hazard and fraud claim to our company. Therefore, the insured need to make sure that they
follow all the procedure that has been told by the authorised centre. If the bad effect after the
treatment is an unintentional and uncertain event, Audace will cover up the loss.

vi. Accessibility

This beauty insurance will be able to evaluate the expected cost of loss. To be able to evaluate
the expected cost of loss, our company will compare and calculate based on the current situation
and the price offered for each treatment. Other than that, our company will also consider the
severity that one will face. Therefore, we will be able to offer a suitable amount and could
cover the amount of loss.

vii. Independence of risks

The beauty insurance will cover the risk that is happening from the beauty treatment. Through
our beauty insurance, we will not only cover only one risk. We will pool other risks together
as it is related to each other. Even if you just subscribe to the premium, we will protect you
from any losses that might happen.

viii. Criminal activity

As stated, before Audace will offer protection against the beauty treatment. But this does not
mean that our company will accept all kinds of clinics or centres that offer beauty treatment.
We will only accept the one who is registered and certified by the Ministry of Health Malaysia
and any other authorised representative. Other than that, a centre that offers any harmful
product or has any bad history to their customers will not be on our lists. Through this initiative,
our client will have a safe beauty treatment such as botox, dental aesthetic and dermal
treatment. From this initiative also, we could control and lessen the number of claims that might
be claimed by the client.

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2.3 Design the Product

i. Product Definition

Generally, our beauty insurance consists of a plan that covers various aesthetic sections.

Beauty Insurance

1) Dental Aesthetic
Dental aesthetic consists of the combination of dental studies and art. These
combinations are used to improve the condition and appearance of the patients' teeth.
What Will Be Covered
• Braces
• Metal Braces Package
• Damon Metal Braces Package
• Veneers
• Direct composite veneer
• Cleaning and whitening
• Teeth whitening
• Deep cleaning
• Full mouth scaling

What Will Not Be Covered

• Veneers are done more than the registered amount.

• Changing types of braces. For example, policyholder wants to change their
Metal Braces to Damon metal braces during the contract period.
2) Botulinum toxin (Botox) treatment
Botulinum toxin, or Botox, is a substance that has many uses in the medical field. Still,
it is also widely used in cosmetic aspects, which is wrinkles. The effect of this substance
is not permanents, so policyholders will need to get it added and fixed every three to
four months. This will keep the patients looking youthful and more confident.
What Will Be Covered
• Forehead
• Glabella (Frown Line)
• Crow's Feet

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 • Bunny Line
• Dimple Chin
• Gummy Chin
• Masseter (Face Reshape)
• Mycotoxin (Full Face)

What Will Not Be Covered

• Treatment other than what we have stated will not be covered.

3) Dermal Treatment
There are many types of skin. Each person will have different types of skin conditions.
Oily, dry, sensitive, and combinations skin types are more popular skin conditions in
Malaysia. Some people also have a skin condition called eczema, which is super
sensitive skin. Dermal treatment will improve the patients' skin conditions and have
more confidence to face the world.
What Will Be Covered
• Acne
• Eczema
• Ageing Skin

What Will Not Be Covered

• The aftereffect of a false skin condition report provided by the policyholders

will not be covered unless updated by our authorised panel clinic during the
policy period.

ii. Underwriting

Underwriting is the process of determining the risk associated with a specific insurance
application and categorising it into the proper risk class, after which the relevant plans are
determined.

Underwriting is also a method of assessing risk to determine whether or not a policy

would be profitable if sold to the general public. An underwriter will utilise their expertise and
classify applicants according to the applicants' requirements and budgets. This will impede the
business from achieving its goals and preventing future losses.

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 In the process of underwriting, we will use and consider some information to determine the
plans for each applicant:

• Applicant Details
- Gender
- Age
- Health and Skin condition
- Health History
- Contact information
- Income

Under this process, we will carefully analyse each application's income to ensure that
the applicants can consistently pay for the premium. We will also focus on the applicants'
health and skin condition to avoid risks like allergic reactions during treatment. The most
important is health history. We will not be prompt to cover if anything happens because of
the pre-existing health complication. Gender aspects also need to be taken into consideration
as men's, and women's skin conditions are different.

• Types of plans
- Dental Plan
- Botox Plan
- Dermal Plan
- Botox and Dermal Combination Plan
- Botox and Dental Combination Plan
- Dental and Dermal Combination Plan
- Ultimate Plan
iii. Pricing

Pricing is the assessment of the rates charged by the insurer following a comprehensive
underwriting procedure. Rate making is crucial as this underwriter must formulate a reasonable
and fair amount of premiums in order to compete with other businesses.

Bronze, silver, gold, and diamond are the four types of coverage classes available in
our seven plans. Each class has a separate set of rates and coverage amounts. The greater the
premium rate, the greater the scope of coverage. Each plan is classified depending on the
demands of our policyholders. Diamond coverage costs the highest premium as it will cover
the policy holder's family. The policy will cover the children until they are 23 years old and
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forever protection towards the spouse if renewed. Below are the plans that our business will
provide.

First Plan- Dental Plan

CLASS OF BRONZE SILVER GOLD DIAMOND

COVERAGE
PREMIUM (RM) 70 100 300 250
AMOUNT 8000 10000 Unlimited 25000
COVERED (RM)
CANCELLATION
12000 14000 30000 29000
RATE (RM)
I-CARD (RM) No No Yes Yes
Table 4.1 Dental Coverage

Second Plan- Botox Plan

CLASS OF
BRONZE SILVER GOLD DIAMOND
COVERAGE
PREMIUM (RM) 100 200 400 300
AMOUNT
10000 20000 Unlimited 30000
COVERED (RM)
CANCELLATION
15000 25000 40000 35000
RATE (RM)
I-CARD (RM) No No Yes Yes
Table 4.2 Botox Coverage

Third Plan- Dermal Plan

CLASS OF
BRONZE SILVER GOLD DIAMOND
COVERAGE
PREMIUM (RM) 100 200 400 300
AMOUNT
10000 20000 Unlimited 30000
COVERED (RM)
CANCELLATION
15000 25000 40000 35000
RATE (RM)
I-CARD (RM) No No Yes Yes
Table 4.3 Dermal Coverage

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Fourth Plan- Dental And Dermal Combination Plan

CLASS OF
BRONZE SILVER GOLD DIAMOND
COVERAGE
PREMIUM (RM) 170 300 700 550
AMOUNT
18000 30000 Unlimited 55000
COVERED (RM)
CANCELLATION
23000 35000 70000 60000
RATE (RM)
I-CARD No Yes Yes Yes
Table 4.4 Dental and Dermal Combination Coverage

Fifth Plan- Dermal And Botox Combination Plan

CLASS OF
BRONZE SILVER GOLD DIAMOND
COVERAGE
PREMIUM 200 400 800 600
AMOUNT COVERED 20000 45000 Unlimited 60000
CANCELLATION
25000 50000 70000 65000
RATE
I-CARD No Yes Yes Yes
Table 4.5 Dermal and Botox Combination Coverage

Sixth Plan- Dental And Botox Combination Plan

CLASS OF
BRONZE SILVER GOLD DIAMOND
COVERAGE
PREMIUM (RM) 170 300 700 550
AMOUNT COVERED
18000 30000 Unlimited 55000
(RM)
CANCELLATION
23000 35000 70000 60000
RATE (RM)
I-CARD No Yes Yes Yes
Table 4.6 Dental and Botox Combination Coverage

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 Seventh Plan- Ultimate Plan (Combination Of Dermal, Botox, And Dental Plan)

CLASS OF BRONZE SILVER GOLD DIAMOND

COVERAGE
PREMIUM (RM) 270 500 1100 850
AMOUNT COVERED 28000 50000 Unlimited 85000
(RM)
CANCELLATION 42000 64000 110000 99000
RATE (RM)
I-CARD No Yes Yes Yes
Table 4.7 Dental, Dermal and Botox Combination Coverage

Generally, the policyholder would choose a plan based on what they usually use in daily life
based on their budget. We have many choices of plans because we want to provide variabilities
to our customers with unlimited choice. The price range also is set based on the average
spending on skincare and treatments. The information we obtain was based on the
questionnaire we provide annually to our policyholders.

iv. Customer Service

Customer service is a one-to-one communication between the consumer who makes the
purchase and the business representative who will provide in-depth support. Audace believes
that direct engagement is necessary to ensure consumer happiness and promote our product.
The consumer will be satisfied with our service and keep on subscribing to the product.

Audace also believes that many of their consumers are people from the entertainment
industry also, adults in their 20s and 30s that are tech-savvy. We will provide a customer service
help interface that is simple and user-friendly on our official website interface to make things
easier and time-friendly. As time has become more modern, we will also open for question in
our official social media account like Twitter and Instagram. Our PR team will do their best to
reply to them and post it to the public for future reference to our new consumers.

Below is information about our company:

Audace Malaysia

Address: Level Concourse, Lot C10, 241, Suria KLCC, Kuala Lumpur City Centre, 50088
Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur

Operating hours: 9:00 a.m. until 5:00 p.m.

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 Contact number: +603-12345 6789

Email Address: audacemalaysia@gmail.com

Website: https://www.audacemalaysia.com.my

Social Media

Instagram: AudaceMalaysia

Twitter: AudaceMalaysia

Annually, our PR team will send a questionnaire regarding our products. We will ask
for feedback and some questions about improving our policy. That way, we can analyse which
aspects we could improve. We can eventually reach the utmost satisfaction from our beloved
consumers.

Beauty is essential in our life. The stigma that only women have to take care of
themselves needs to be abolished. Here we are promoting our product for both men and women.
Some of the needs for men and women will be different. Therefore, some of the policies can
be added and updated based on consumer needs and priorities.

v. Marketing And Distribution

The cost of marketing and distribution has been factored into the pricing process. The target
market will influence underwriting requirements and the amount of complexity. In contrast,
the scope of the marketing campaign will affect the level of business and the degree of
retention.

One of the methods that could increase sales is collaborating with selected best-
performance hospitals, aestheticians, and dental clinics throughout Malaysia. By advertising
extensively, it can attract more customers who are interested in beautifying themselves with
more affordable options. Other than that, investing in the paid review with social media
influencers with high and stable engagement will also widen our connection. They will publicly
promote our product to their followers as people spend more time on social media these days.

vi. Capital Requirement

This beauty insurance policy will cost a lot of money to begin. Even if this product generates
a significant profit, there is no disputing that we need to require some capital funding. Some

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 conditions are being imposed to guarantee that the business does not engage in excessive
leverage and risk to prevent business bankruptcy.

vii. Administration System

A solid administration system is essential for the success of a new product. Since this
product is newly launched, we should provide a system that could make the management more
effective. The system will provide regulations on managing their employees and making sure
that the management is systematic. There are four core departments which consist of the
underwriting, pricing, claims and marketing and communication department, that have a pure
relationship of managing the policy.

The first core department is the underwriting department. The underwriting department
will assess all the risks associated with each of the applications. They will also classify the
applicants based on their risk class to give them the more suitable plan offered by our company.

Other than that, there is also a pricing department. This department will build a
mathematical model to cater for their policy. The pricing team will calculate the premium for
the applicant based on the chosen plans. Suppose the applicants decided to cancel the plan
before it reaches the maturity date. In that case, this department is responsible for managing
the calculation of the cancellation rate.

Besides that, there is also claiming department. This department is in charge of claim
settlement. They are the ones that will be processing the claims. Evaluating the policyholder's
losses, either the plan covers it or otherwise. They will also determine the amount that will be
issued to the policyholder. And the most critical task this department has to do is investigating
the claim. They have to check whether the claim is a fraud or not. We will review the requested
claim in various aspects, such as the types of treatment, whether the treatment centre is
registered with MOH and authorised representative and more. This is because we need to
ensure that no policyholder gets any additional benefits from their claims.

The last core department that is vital in this aspect is the marketing and communication
department. This department is in charge of reaching out to prospects, customers, investors,
and the general public. They also have to establish a favourable image for your business to
attract more customers. Designing a feed for an Instagram page, insightful information on
Twitter, and updating our official website will also boost our followers and increase the
probability of getting new clients.

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viii. Monitoring

It is imperative for any business operation, especially a new one like Audace, to keep track of
the timeline. Monitoring this timeline is also beneficial in other areas of management.
Operational management, risk management, financial management, and statutory management
are just a few instances. It is more convenient and practical to establish these processes prior to
the product's introduction since it saves time and work. Monitoring the likelihood of each
product and the portfolio is critical to the company's growth to avoid fortuitously and gain
profits.

The monitoring process should be established when the product is being developed, and
the administrative systems are established. The actual quality of the monitoring systems will
be determined when we monitor the product itself and the company's standard operating
procedures. Earnings can be obtained on a product that has just been released—monitoring
frequently aids in detecting early indicators of diminishing profitability. Then decide whether
to make changes to the product, remove it from the market, or other better options.

ix. Legislation And Compliance

Our policy follows the term insurance concept as our terms and conditions of this policy. Our
renewal term would be every five years, and the premium price for each renewal will increase.
As per each renewal, the risk of getting complications and allergy reactions increases as skins
and teeth grow more mature and older. Once the policy is not renewed, we will not accept any
claims in case of complications happens. Other than that, pre-existing skin or teeth
complications that can cause a loss to our company will not be covered unless fortuitous.

Besides that, our policy is different from the others. We are different because we can
use an insurance card or I-Card obtained right after the policyholder purchases our plan. I-Card
can lessen the policyholder's burden to issue their claim from their agents. I-Card can save
time, cost, and more consumer-friendly.

While people can use I-Card, there will be some policyholders who would prefer using
the conventional method. The conventional method consists of the policyholder having to pay
for the cost first. Later, the receipt will be given to the agents. Agents will send it to the
headquarter for claim settlement. Time taken would be longer than using I-Card, but the
premium price would be lower than I-Card's version in hindsight.

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2.4 Review the Product Design

Reviewing the product design is the last stage of the product design process. At this stage, we
have to look back at the reasons for developing this product to ensure the product meets the
actual requirements. Then if the product does not meet the actual requirements, we have to
change some aspects, and we have to go through another iteration of the whole process.

As we know, there are various types of beauty products that are unsafe to be used and
can cause side effects. Some producers will give full information about their product, but some
will limit the information about their product. The effectiveness of a product also depends on
the condition of their face, times, and food that they eat. Therefore, as a consumer, they should
pay for insurance to protect themselves from unwanted incidents. There is no other insurance
that is willing to cover beauty appearances or side effects from consuming beauty products.
Hence, we, beauty insurance products, are established to break into a new market and give a
solution for these problems.

Other than that, we have to convince the customer that our product is not a short-term
product. It will remain in the market for a long-term period and continue to expand widely in
Malaysia. In addition, there are a lot of jobs that depend on beauty and appearances, such as
stewardesses, actors, and beauty and make-up influencers. Having beauty insurance is
important to secure their jobs. By that, we have to set up a strategy and our own branding to
ensure the customer has a good reason to choose us. If anything happens, such as our product
is hard to sell in the market, we should look back to the process. For example, reduce the price
of a premium or use another way of marketing.

3.0 NATURE OF PROCESS

As a product developer, the developer should know how to start, end and look at the process
whether the process follows the flow or not. Some experts that are familiar with product design
can overlap some stages, or they can intercept the interaction between the stages, but it depends
on the types of products. If they design the new product, they must follow the step of designing
the product. But, if they redesign, evaluate or restructure the product, they can overlap certain
stages to ensure the product is able to be in a market and at the same time the product is known
by the customer.

The supply relationship can be thought of as an actuarial responsibility, and the demand
relationship as a marketing responsibility. From the actuary's viewpoint, the key aspects are

23
examining the underlying cause and effect relationship among critical variables associated with
new products, choosing assumptions for modelling the product's future experience, then using
the resulting model to understand how changes in both the cost and volume mixes will affect
probability.

Key aspects:

i. Examining the Underlying Cause and Effect of the Relationships Among the
Critical Variables Associated with the New Product.

Several iterations of the design control cycle may be required. One of the key aspects is
examining the underlying cause and effect relationships among the variables associated with
the product. Designing a product requires a lot of data. This data might change from time to
time due to many external factors. Designers shall take this into account and repeat in some
areas of the design control cycle that may be required. For example, people's spending patterns
change according to several factors such as salary and employment.

Other than that, the company should look at the issues of the product, especially for
new products. Some products have an impact on customers, but some products do not. The
product design cycle is a continuous process, slightly like the risk management process. For
the risk management process, the company must look at whether the process achieves the
company's objective or not. The same goes for the product design cycle. The product must
achieve the company's objectives, such as the company can achieve the target level of profit,
be able to establish and sell the product in the market with a reasonable price, and the product
can be accepted by the society.

ii. Choosing Assumptions for Modelling the Product's Future Experience.

The next key aspect of the design cycle iterations is choosing assumptions for modelling the
product's future experience. The role of assumptions is to document the decisions that have
been made clearly. In the presence of assumptions, we can run, measure, and test the model.
We can use the test outputs with the selected values to determine any assumptions. Through an
expert opinion, we can set real assumptions for models that can help us in marketing beauty
insurance in the future. A value can be set as a standard of a company which in it is general
and based on the personal opinion of people. That means the modelling may not be 100%
accurate, but we can say it will be slightly accurate. For instance, after 5 years of promoting

24
beauty insurance, the society can put their trust in our company and start subscribing to our
product. Another assumption for the model that we can measure are future economic
conditions, the unemployment rate and existence of new competitors in the market.

iii. Using the Resulting Model to Understand How Changes in Both the Cost and
Volume Mixes will Affect Probability.

Lastly, use the resulting model to understand profitability from both cost and volume changes.
Volume means the quantity of an asset that transfers to another owner during a period of time.
After we get the result of modelling the product, we can predict the change that may happen
and indirectly will affect the probability of the unforeseen events occurring. This is closely
related to both the cost and the volume. To illustrate, we introduce our new product, beauty
insurance. We want to look at the volume in terms of policies that sell to the customer. The
customer's expectation, reflection and opinion for this policy and at the same time to get the
amount of policy being sold to customers. These are the issues and effects with regard to
product design. Other than that, we have to plan and have a backup if the death rate of the
country is increasing drastically. By planning, our company can predict the future total claim
to be made per year. Our company will be able to fulfill all of the claims that are made by the
policyholder. At the same time, our company can gain profit from the product.

4.0 RISK ASSESSMENT AND UNDERWRITING

Risk Management Process

Every company have to know about the risk that will occur or any unforeseen events, same
goes to our company. We are taking a step ahead to minimise the risk so it will be able to be
monitored by the company.

1. Identify the Risk

Risk that will occur should be identified in order to provide coverage for that particular
risk. There are some risks that should be taken in as our company will be able to receive
or optimised the risk in the future. Hence, below are the risks identified for an insurer
in the management process:
i. Underwriting Risk

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 Risk that may arise from underwriting will be borne by underwriter due to
factors that cannot be controlled or inaccurate assessment regarding the
policy chosen. Our products might have risk in terms of:
• insurer's negligence
 miscalculate premiums - insurer may overestimate or underestimate
premium for expected claims
 expired policies
 inaccurate customers details - wrongly key in customers data
• Customer's dishonesty
• Hiding or provide any wrong information regarding their personal data
in order to pay less premiums
This will cause the insurer loses money on the insurance since it costs more than it earns
in premiums or might be insufficient to cover the customers claims. Hence, it will affect
the business performance due to the loss occur.
ii. Market Risk
Mostly markets are volatile in terms of performance, demand and also
protection of customers. Therefore, our employees need to study about the
market performance to provide a suitable product and price at particular time to
the customers. For this reason, market demand will change due to customers
preference and also understanding the beauty standards different for every
culture.
iii. Operational Risk
In any insurance company including Audace, problem may arise due to failure
of system, process, people and policy design. Risk that may occur in our
company are:
• Being hacked by outsider
• Miscalculating premiums
• Ambiguous product design
iv. Distribution Risk
This risk is associated with using distribution channel to inform the market
about our business. As for Audace, we might experience distribution risk
because our company is still new in the industry. Hence, the distributor which
is all our agent are located at the headquarter as we have not setup an agency at

26
 other location. Thus, our business might have problems in terms of reputation
and unable to reach the aim of product sold in a certain period. However, we
have to cover the cost of risk of an agent when they go and meet directly the
customer.
v. Expense Risk
Like any other businesses, insurance company will also experience this risk
which may arise due to expenses are excessive which has a negative impact on
profit. As for Audace, we might face expense risk if company's liability
coverage is higher than premiums charged. Hence, the company will encounter
with the chance of loss this event will occur.
2. Assess the Risks
The risks need to be evaluated meticulously which will be assessed by the risk manager
of Audace to ensure the size of the risk, determine the probability of event to occur and
classify it as dependant or independent risk. This assessment can be managed
qualitatively or quantitatively which is through collected information or surveys and
calculation respectively.
3. Plan strategies
Strategies will help set up sense of direction to deal with the risk effectively and
efficiently in order to achieve the goals of the company. Below are few effective
strategies to control the risk occur:
• Get a document management system so that information can be shared,
organised and stored efficiently
• Review the document given by the customers carefully
• Double check after key in the information of customers by different people.
• Let the one who have the right knowledge, experience and background to design
the product that is meaningful to the customer.
4. Monitor and control risks
Audace will monitor and control the risk by looking on the strategy used and determine
the effectiveness of the plan. If the plan perform well means that the strategy of the
company complies with the plan.
5. Envision risks
Restructure by checking the strategy of the company if it can reach the objective of the
business or not. For instance, Audace want to reach the targeted profit within 5 years.

27
 If this fail, our risk manager will evaluate the performance of business to look on
other strategy of managing the risk.

4.1 Selection

The benefits of our product are:

1. Trusted coverage
Customers will feel secure as the policy coverage will cover for any unforeseen events
resulting from any beauty treatment that could lead to death or affect beauty
appearance.
2. Hassle-free to claim for the insurance
Customer will get an I-Card when they purchase a certain the insurance so every time
they go for a particular beauty treatment at registered and certified by the Ministry of
Health Malaysia and any other authorised representative, they can claim directly
without having a guarantee letter. However, for customer who does not have an I-Card,
they have to pay for the treatment first. Later, agents will send the receipt to the
headquarter for claim settlement.
3. Reasonable premium charged
The premium charged is affordable according to the type of products that the customer
chooses either only one policy, combination of two or all of the policy offered by
Audace.
4. Excellent customer service
Our employee is highly trained and has expertise in their own field. Hence, it is
customer's guaranteed and they will be satisfied with our service and products as well.
5. Accessible online and certified insurance agent
Customers can easily purchase our products on our website as it will be directed to our
agent or our certified agent will consult directly to the customer by setting up an
appointment.

4.2 The Principle of Risk Classification

Audace is the first ever beauty insurance that also known as insurance company that provide
coverage for beauty appearance focused on the part of face and also dental. There is a very low
probability of someone will be injured or died due to beauty treatments which is unavoidable.

28
However, we already look into few events that happened due to this issue. Therefore, we want
to reduce chance of loss by providing compensation to the insured or beneficiary and
negligence claims made by customers in order to minimise the damage. Thus, it falls under life
insurance and health insurance. Life insurance provide death benefit to insured's beneficiary
when they die and health insurance provide coverage for insured's surgical and medical
expenses.

This beauty insurance follow term life insurance as it guarantees payment of the insured death
to the insured's beneficiaries if the insured died while the policy is still active. This insurance
will cover the customer that undergo any beauty treatment which caused disable or death.
Hence, it will provide compensation to the customer's beneficiary. On the other hand, Audace
also follow health insurance. This type of insurance will cover for the customers beauty
treatment expenses and the risk of side effects after undergo treatment such as sickness, allergic
reaction or permanent scarring. For instance, if a customer suffering a beauty treatment injury,
they can claim by using the Audace I-Card provided to cover the cost of loss or for customers
who does not have an I-Card, it is still hassle free as they can call directly our agent for issuing
the claims.

4.3 Why Underwrite?

Underwriting is a basis of the whole insurance industry including Audace. It is a key process
of identifying and classifying prospect customer to its appropriate risk to determine which types
of insurance they can apply for with the reasonable price of premium. Audace underwriters
have to look thoroughly at each risk that will in long term and fair way to avoid overestimates
or underestimates the premium charged. Underwriters will provide equity of equal risk is
treated in the same way. For instance, they will provide protection to the customers at a certain
level depending on the certain level of risk. As the risk of customer grow, we will provide more
benefits to ensure the customer is protected at all time.

• Life insurance underwriting

Similarity between life insurance underwriting with Audace is it based on different
rating factors regarding the customers information. We will look on customers age,
gender, how often customer go for a beauty treatment, customer's skin or teeth
condition, type of beauty treatment that they go and any history of beauty treatment.
Our underwriters will also look on the customer's lifestyle, occupation, financial
history, medical record to determine which class of risk the customer should be place.

29
 This will be taken into account to give the right premium for a particular customer
because every customer is unique as they have different background. The higher the
risk of a particular customer, the more you pay for the beauty insurance. However,
customers need to know that our beauty insurance is similar as term life insurance
which is usually known has the lowest premium but since it is also a combination with
health insurance, the price is slightly higher but still affordable to every customer.
Besides, customers can choose insurance that offers a greater expected return on
investment, high death benefits and a cancellation rate is relatively high to avoid
customers cancelling the insurance that they have purchased.

5.0 CONCLUSION

In this modern era, beauty insurance is important as people are getting more concerned about
taking care of their appearances especially among the entertainment and modelling industries
to provide coverage if there are some risks that occur during or aftereffect of having the
treatment. In addition, several people said beauty appearances are essential based on our pilot
study to strengthen the company's objective by providing protection due to any complication
of beauty treatments. By assessing the risk and details of a customer, we can recommend them
the most suitable plan that is customer guarantee as our highly trained employee will manage
it. As for the time being, Audace does not have any competitors in the same category, but we
are competing with the existing insurance company that offers similar features such as life
insurance and health insurance. Moreover, being the first Malaysian beauty insurance company
to break into the market with an affordable premium, Audace will satisfy the customer's needs
and distribute our products, which are dermal, botox and dental, directly using emails and
advertising online. Besides, our company offers a lot of benefits to provide our valued
customers hassle-free claims, trusted coverage, and access online as well. Although designing
the product for this insurance requires ample time, Audace wants to give the best coverage
from an unsafe chemical used during the treatment. We only accept a certified and authorised
centre by the Ministry of Health Malaysia. Ultimately, Audace aspires to be the customer's first
choice regardless of having new beauty insurance in the future and continue to grow the
business and the team together to cater to our customer needs.

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