CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED
MEMORANDUM
FROM: Hannah Brinkley, Esq. Calderwood & Harkness LLP 1177 Avenue of the Americas, 34th Floor New York, NY 10036
TO: Derek Mallory, General Counsel & Chief Compliance Officer Quorum Insurance Holdings Corp.
Lena Fujimoto, Director, Market Conduct & Consumer Affairs Quorum Insurance Holdings Corp.
DATE: November 10, 2025
RE: Phase 3 Training Program Outline & Materials Summary — Market-Conduct Compliance Refresh
MATTER NO.: 1025-00002
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED
This memorandum and all attachments hereto are protected by the attorney-client privilege and constitute confidential attorney work product prepared in anticipation of regulatory proceedings and in furtherance of legal advice rendered by Calderwood & Harkness LLP to Quorum Insurance Holdings Corp. and its subsidiaries. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
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I. PURPOSE AND EXECUTIVE SUMMARY
This memorandum outlines the training curriculum, delivery schedule, attendance-tracking methodology, and certification requirements for Phase 3 (Training & Implementation) of the market-conduct compliance refresh engagement undertaken by Calderwood & Harkness LLP on behalf of Quorum Insurance Holdings Corp. ("QIH" or "Quorum") and its carrier subsidiaries. The purpose of this memorandum is to provide Derek Mallory and Lena Fujimoto, as the executive sponsor and program coordinator, respectively, with a comprehensive overview of the training program structure, content, logistics, and deliverables so that the client team can finalize all internal preparations and disseminate mandatory participation communications in advance of the Phase 3 launch date.
Phase 3 is scheduled to run from November 17, 2025 through December 5, 2025, a period of approximately two and one-half weeks. This compressed timeline reflects the urgency imposed by the external regulatory calendar, particularly the Florida Office of Insurance Regulation ("FL OIR") Corrective Action Plan ("CAP") compliance certification deadline of December 31, 2025, and the need to assemble complete training evidence packages well in advance of that date.
The training program has been designed to address the compliance deficiencies identified during Phase 1 (Assessment & Gap Analysis), which was completed on October 3, 2025. Phase 1 catalogued and analyzed the following categories of compliance deficiencies:
• The 14 formal findings contained in the FL OIR final examination report dated May 12, 2025 (covering the examination period of January 1, 2021 through December 31, 2023), which include six claims-handling timeliness findings, five advertising findings, and three complaint-handling findings;
• The 23 control deficiencies identified in Internal Audit Report No. IA-2025-017, issued by Neil Granger, Director of Internal Audit, on August 4, 2025, which rated the overall market-conduct compliance program as "Needs Significant Improvement" — the second-lowest rating on Quorum's four-tier internal audit rating scale; and
• The gaps identified in the state-by-state regulatory requirements matrix covering all 38 unique licensed states (representing 79 total state licenses held across Quorum Indemnity Insurance Company ("QIIC"), Quorum Specialty Underwriters, Inc. ("QSU"), and Quorum Life & Annuity Company ("QLA")).
The training program encompasses three distinct tracks targeting a total of 815 employees across all three carrier subsidiaries and Pinnacle Bridge MGA, LLC ("Pinnacle Bridge"), the affiliated managing general agent whose in-house marketing team was responsible for originating the substantial majority of the non-compliant digital advertising identified during the examination. The three tracks are as follows:
Track 1 — Claims-Handling Timeliness Standards and Escalation Protocols (~420 FTEs)
Track 2 — Advertising Review and Filing SOP (~85 FTEs)
Track 3 — Consumer Complaint Intake, Logging, and Response Procedures (~310 FTEs)
Training completion records generated during Phase 3 will serve as critical supporting documentation for multiple regulatory and governance purposes, including:
(a) The FL OIR Corrective Action Plan compliance certification submission due December 31, 2025;
(b) CDI remediation evidence relating to the Order to Show Cause hearing held on October 14, 2025, and any subsequent proceedings, stipulations, or consent orders arising therefrom;
(c) Anticipated follow-up examinations by FL OIR (expected Q4 2025), the California Department of Insurance ("CDI") (expected Q1 2026), and the New York Department of Financial Services ("NYDFS") (expected Q1 2026); and
(d) Board-level reporting to the QIH Board of Directors' Audit & Compliance Committee, chaired by Margaret Aldworth, as directed in the Committee's August 12, 2025 resolution.
The remainder of this memorandum sets forth in detail the background and regulatory context for the training program, the composition and organizational scope of the training audience, the substantive curriculum for each of the three tracks, the delivery methodology, the knowledge-check assessment and certification sign-off requirements, attendance-tracking and reporting procedures, the use of training evidence in pending and anticipated regulatory proceedings, coordination with third-party consultants and local counsel, budget and resource allocation considerations, the master delivery schedule, identified risks and contingencies, and recommended next steps and action items for the client team.
II. BACKGROUND AND REGULATORY CONTEXT
A. Triggering Events
The market-conduct compliance refresh engagement was precipitated by a series of regulatory actions and internal findings that collectively indicated material deficiencies in Quorum's market-conduct compliance infrastructure across its three carrier subsidiaries.
The Connecticut Department of Insurance ("CTDOI") initiated a coordinated multi-state market-conduct examination of QIIC (NAIC No. 41927) in September 2023, pursuant to NAIC Market Regulation protocols. The Florida Office of Insurance Regulation served as the lead examining state. The examination covered the period from January 1, 2021 through December 31, 2023, a three-year review window consistent with standard multi-state coordinated examination practice.
The FL OIR issued its final examination report on May 12, 2025, containing 14 formal findings categorized as follows:
• Six (6) claims-handling timeliness findings, relating to failures to acknowledge and pay claims within applicable statutory deadlines across multiple jurisdictions, including Florida, Connecticut, Ohio, and Illinois;
• Five (5) advertising findings, relating to the publication and dissemination of non-compliant digital advertisements that failed to comply with applicable state filing requirements, contained misleading rate comparisons, or lacked required disclosures; and
• Three (3) complaint-handling findings, relating to failures to log and respond to consumer complaints within applicable statutory deadlines in three states.
In the wake of the examination report, two regulatory jurisdictions assessed monetary penalties against QIIC. The CTDOI assessed a civil penalty of $275,000, which was paid by QIIC on July 15, 2025. The FL OIR assessed an administrative fine of $180,000, with payment due on September 30, 2025. The total monetary penalties assessed as a result of the examination were $455,000.
Separately, the California Department of Insurance issued an Order to Show Cause on June 18, 2025, specifically directed at the advertising violations identified during the multi-state examination as they related to QIIC's California operations. A hearing on the Order to Show Cause was held on October 14, 2025. As of the date of this memorandum, the CDI has not yet issued a final order or decision; discussions regarding a potential consent agreement remain ongoing between Calderwood & Harkness, local California counsel, and CDI staff.
In response to the FL OIR examination findings, QIIC submitted a Corrective Action Plan to FL OIR on July 1, 2025. The CAP was accepted with modifications on July 28, 2025. Under the terms of the accepted CAP, QIIC is required to demonstrate full remediation and submit a compliance certification to FL OIR no later than December 31, 2025. The Phase 3 training program constitutes a central component of the CAP remediation evidence.
B. Internal Audit Findings
Concurrent with the regulatory examination process, Quorum's internal audit function undertook an independent review of the market-conduct compliance program across all three carrier subsidiaries. Internal Audit Report No. IA-2025-017, prepared under the direction of Neil Granger, Director of Internal Audit, was issued on August 4, 2025. The report identified 23 control deficiencies spanning claims-handling processes, advertising review and filing procedures, consumer complaint intake and response practices, and supervisory oversight mechanisms across all three carriers. The overall market-conduct compliance program was rated "Needs Significant Improvement", which represents the second-lowest tier on Quorum's four-tier internal audit rating scale (the scale progressing from "Satisfactory" to "Needs Improvement" to "Needs Significant Improvement" to "Unsatisfactory").
The internal audit findings were presented to the QIH Board of Directors' Audit & Compliance Committee at its regularly scheduled meeting on August 12, 2025. The Committee, chaired by Margaret Aldworth, directed management to retain new outside counsel with deep insurance regulatory expertise to oversee a comprehensive market-conduct compliance refresh. This directive resulted in the August 19, 2025 retention of Calderwood & Harkness LLP under the terms of the engagement letter executed by Derek Mallory on behalf of QIH.
C. Key Compliance Metrics Driving Training Design
The training curriculum for each of the three tracks has been informed by specific quantitative compliance metrics that illustrate the nature and severity of the identified deficiencies. The following metrics are drawn from the FL OIR examination report, Internal Audit Report No. IA-2025-017, and supplemental data analysis performed by Ridgeline Consulting Group, LLC during Phase 1:
Claims-Handling Timeliness Metrics:
• QIIC's average claims acknowledgment time for calendar year 2024 was 18.7 business days, which exceeds the most stringent state statutory maximum of 10 business days by 87% and represents a systemic failure to meet acknowledgment deadlines in multiple jurisdictions.
• QIIC's timely claims payment rate for calendar year 2024 was 74.2%, meaning that more than one in four claims payments were not made within the applicable statutory prompt-pay window. This figure falls significantly short of the 95% internal target established in Quorum's prior compliance policy, representing a 20.8-percentage-point gap.
• The FL OIR examination team reviewed a sample of 625 claims files out of a total population of 12,400 closed claims during the examination period, representing a 5.04% sample rate. Of the 625 sampled files, 74 files (11.8%) contained one or more deficiencies, including missing acknowledgment documentation, late payment processing, and inadequate denial explanations.
Complaint-Handling Metrics:
• QIIC's complaint ratio for calendar year 2024 was 1.47 per 1,000 policies in force, which is 79.3% above the NAIC median of 0.82 per 1,000 policies.
• QSU's complaint ratio for the same period was 0.93 per 1,000 policies, which is 13.4% above the NAIC median.
• QLA's complaint ratio was 1.12 per 1,000 policies, which is 36.6% above the NAIC median.
• The total number of consumer complaints filed against all three carrier subsidiaries during calendar year 2024 was 2,847, a volume that strained existing complaint-handling resources and contributed to the response-time failures identified by the examiners.
Advertising Compliance Metrics:
• A total of 43 unique non-compliant digital ad creatives were identified across Strathmore Systems, Meta (Kestrel Services Inc./Northpoint Services Inc.) advertising platforms, and programmatic display channels during the examination period and subsequent internal review.
• Of the 43 non-compliant ad creatives, 31 (72.1%) were placed by Pinnacle Bridge MGA's in-house marketing team without being routed through QIIC's advertising compliance review process. The remaining 12 creatives were placed directly by QIIC's marketing department, but 7 of those 12 had not been submitted for state filing in jurisdictions requiring prior approval or file-and-use procedures.
• The period during which non-compliant advertisements were in circulation spanned approximately 32 months, from March 2022 through November 2024, reflecting a sustained breakdown in advertising compliance controls.
• The states with formal advertising findings in the examination report were Florida, California, Illinois, and Ohio.
These metrics collectively informed the design of the Phase 3 training curriculum, with each track's content calibrated to address the specific root causes and systemic weaknesses underlying the data.
D. Phase 2 Deliverables Informing Training Content
The substantive content of the Phase 3 training program is grounded in the policy and procedural documents developed during Phase 2 (Policy Revision & SOP Development), which commenced on October 6, 2025 and runs concurrently through November 14, 2025. The key Phase 2 deliverables that serve as the foundation for the training curriculum include:
• The revised Market-Conduct Compliance Manual (Draft), which establishes the overarching compliance framework, governance structure, roles and responsibilities, and baseline standards applicable to all three carrier subsidiaries and Pinnacle Bridge MGA;
• The Advertising Review & Filing Standard Operating Procedure (Draft), which establishes the centralized advertising compliance review workflow, filing procedures for all applicable state jurisdictions, and mandatory pre-publication clearance requirements for all marketing materials, including those originated by Pinnacle Bridge MGA;
• The Claims-Handling Timeliness Remediation Protocol (Draft SOP), which establishes the uniform 10-business-day acknowledgment standard, escalation triggers and automated alert configurations, supervisory review requirements for aged claims, and documentation standards designed to withstand regulatory examination scrutiny; and
• The Consumer Complaint Response Procedures (Draft SOP), which establishes the uniform 24-hour complaint logging requirement, 3-business-day acknowledgment standard, state-by-state response-deadline compliance procedures, escalation criteria, and root-cause analysis methodology.
Each of these documents is currently in advanced draft form and is expected to be finalized by November 14, 2025, prior to the commencement of Phase 3 training. The training modules will reference and incorporate specific provisions from these documents, and copies of the finalized SOPs will be distributed to all training participants as supplemental materials.
III. TRAINING AUDIENCE AND ORGANIZATIONAL SCOPE
A. Total Training Population
The Phase 3 training program will be delivered to a total population of 815 employees across four affiliated entities within the Quorum Insurance Holdings Corp. corporate family. This population includes all personnel whose roles and responsibilities are directly implicated by the compliance deficiencies identified during Phases 1 and 2 and whose training is required to demonstrate adequate remediation to FL OIR, CDI, NYDFS, and other regulatory bodies.
B. Breakdown by Track
The 815 employees are assigned to one or more of the three training tracks based on their functional roles and responsibilities, as follows:
Total: 420 + 85 + 310 = 815 FTEs
It is noted that a limited number of individuals may be assigned to more than one track based on cross-functional responsibilities (for example, claims supervisors who also serve as complaint escalation contacts). In such cases, the individual must complete all assigned tracks and achieve passing scores on each track's knowledge-check assessment. The total unique employee count, after accounting for dual-track assignments, remains approximately 815 individuals.
C. Entity-Specific Notes
The following entity-level considerations are relevant to the training program design and delivery:
Quorum Indemnity Insurance Company (QIIC), NAIC No. 41927: QIIC is the entity subject to the FL OIR examination and the resulting 14 formal findings. Personnel are distributed across all 28 states in which QIIC holds licenses. QIIC represents the largest component of the training population given its status as the largest Quorum carrier by premium volume ($2.14 billion direct written premium in 2024) and its position as the primary subject of the regulatory examination. QIIC's claims, marketing, and customer service departments are headquartered in Tampa, Florida, with satellite operations in Hartford, Connecticut; Columbus, Ohio; and Chicago, Illinois, among other locations.
Quorum Specialty Underwriters, Inc. (QSU), NAIC No. 53812: QSU is licensed in 22 states and focuses on commercial lines of business, including commercial general liability, professional liability (errors and omissions), and cyber liability. QSU generated $1.38 billion in direct written premium in 2024. Although QSU was not the primary subject of the FL OIR examination, the internal audit identified control deficiencies within QSU's claims and complaint-handling operations, and QSU's complaint ratio of 0.93 per 1,000 policies exceeds the NAIC median. QSU's participation in the training program reflects the enterprise-wide remediation approach mandated by the Audit & Compliance Committee.
Quorum Life & Annuity Company (QLA), NAIC No. 67403: QLA is licensed in 19 states and underwrites individual and group life insurance and fixed annuity products. QLA generated $640 million in direct written premium in 2024. QLA's complaint ratio of 1.12 per 1,000 policies (36.6% above the NAIC median) necessitates inclusion in Track 3 (Consumer Complaint Response). QLA claims personnel are also included in Track 1 to ensure consistent claims-handling timeliness standards across all carrier subsidiaries.
Pinnacle Bridge MGA, LLC: Pinnacle Bridge is a managing general agent and surplus lines broker licensed in 34 states, with $890 million in managed premium volume in 2024. Pinnacle Bridge's marketing personnel are specifically and exclusively targeted for Track 2 training, given the finding that 72.1% of the non-compliant digital advertisements (31 of 43 unique ad creatives) originated from Pinnacle Bridge's in-house marketing team and were placed without routing through QIIC's advertising compliance review process. A dedicated supplemental training session has been designed for Pinnacle Bridge marketing personnel to address the unique compliance obligations and procedural failures specific to the MGA's operations. QLA is not included in Track 2 because QLA does not conduct digital advertising through the channels implicated in the examination findings and does not utilize Pinnacle Bridge for distribution.
D. Key Internal Stakeholders and Training Sponsors
The following individuals have been designated as internal training sponsors and key stakeholders for the Phase 3 program:
• Thomas Raeburn, Senior Vice President, Claims Operations: Sponsor for Track 1 (Claims-Handling Timeliness Standards and Escalation Protocols). Mr. Raeburn has direct operational oversight of the claims departments across all three carrier subsidiaries and is responsible for ensuring that claims personnel are available for training sessions and complete all requirements by the December 5, 2025 deadline.
• Lena Fujimoto, Director, Market Conduct & Consumer Affairs: Sponsor for Tracks 2 and 3 (Advertising Review and Filing SOP; Consumer Complaint Intake, Logging, and Response Procedures). Ms. Fujimoto serves as the overall training program coordinator on the client side, managing logistics, internal communications, and coordination with Calderwood & Harkness LLP. Ms. Fujimoto also serves as the complaint program owner and advertising compliance function head referenced in the Phase 2 SOPs.
• Priya Venkatesh, Vice President, Regulatory Affairs: Oversight of regulatory documentation and certification evidence. Ms. Venkatesh is responsible for the preparation and submission of the FL OIR compliance certification letter and supporting evidence packages, and for ensuring that training records meet the evidentiary standards expected by each regulatory body.
• Derek Mallory, General Counsel & Chief Compliance Officer: Executive sponsor of the overall market-conduct compliance refresh engagement and the Phase 3 training program. Mr. Mallory has ultimate accountability for the successful completion of the training program and serves as the final escalation point for non-completion issues. Mr. Mallory also serves as the primary liaison to the Board Audit & Compliance Committee.
IV. TRAINING CURRICULUM — TRACK 1: CLAIMS-HANDLING TIMELINESS STANDARDS AND ESCALATION PROTOCOLS
A. Scope and Objectives
Track 1 is designed to address the six claims-handling timeliness findings contained in the FL OIR final examination report dated May 12, 2025. These findings collectively reflect a systemic failure by QIIC to acknowledge and pay claims within applicable statutory deadlines across multiple jurisdictions during the examination period. The Track 1 curriculum is structured to achieve the following specific objectives:
1. Reduce the average claims acknowledgment time from the current 18.7 business days to within 10 business days, which represents the most stringent state statutory maximum across Quorum's 38-state licensed footprint and has been adopted as the uniform internal standard in the revised Market-Conduct Compliance Manual.
2. Increase the timely claims payment rate from the current 74.2% toward the 95% internal target, with the goal of achieving sustained compliance rates at or above 95% within the first full quarter following training completion.
3. Ensure that all claims adjusters, claims supervisors, and claims managers are thoroughly familiar with the Claims-Handling Timeliness Remediation Protocol (Draft SOP) developed during Phase 2 and understand its operational implications for their daily workflows.
4. Establish a shared understanding of the escalation protocols, supervisory review requirements, and documentation standards that will govern claims-handling operations going forward, including the automated alert system and statistical sampling methodology that will be used for ongoing compliance monitoring.
Track 1 targets approximately 420 FTEs across QIIC, QSU, and QLA, encompassing claims adjusters at all experience levels, claims supervisors with file-oversight responsibilities, and claims managers with departmental oversight authority.
B. Module 1: Revised Claims Acknowledgment Standards
Module 1 provides a comprehensive overview of the statutory claims acknowledgment deadlines applicable across all 38 unique licensed states, referencing the state-by-state regulatory requirements matrix developed during Phase 1. This module is designed to ensure that every claims handler understands both the general framework of state-by-state acknowledgment requirements and the specific uniform standard that Quorum has adopted in response to the examination findings.
The module will cover the following topics:
• A summary of statutory claims acknowledgment deadlines organized by state, with particular attention to the jurisdictions with the most stringent requirements, including Florida (14 calendar days under Fla. Stat. § 626.9541(1)(i)), New York (15 business days under N.Y. Ins. Law § 2601 and NYDFS Regulation 64), Connecticut (15 business days under Conn. Gen. Stat. § 38a-816(6)), California (15 calendar days under Cal. Ins. Code § 790.03(h)), and Ohio (10 business days under Ohio Rev. Code § 3901.21).
• The rationale for adopting a new uniform 10-business-day acknowledgment standard across all jurisdictions, as set forth in the revised Market-Conduct Compliance Manual. This uniform standard is intentionally set at the level of the most stringent state requirement (Ohio's 10-business-day standard) to eliminate the complexity and compliance risk associated with tracking differing deadlines across 38 states.
• A detailed walkthrough of the specific FL OIR findings regarding acknowledgment delays, including anonymized case studies drawn from the 74 deficient files identified in the examination sample, to illustrate the types of acknowledgment failures that gave rise to regulatory findings.
• Practical examples contrasting compliant and non-compliant acknowledgment timelines, including scenarios involving weekends, holidays, multi-claimant files, and claims submitted through different intake channels (mail, email, web portal, telephone).
The module is designed to impress upon participants the concrete consequences of acknowledgment delays — not only in terms of regulatory penalties (referencing the $455,000 in total fines and penalties already assessed) but also in terms of consumer outcomes, complaint generation, and reputational harm.
C. Module 2: Prompt-Pay Compliance
Module 2 addresses the timely payment of claims following the completion of investigation and the determination of coverage. The module focuses on the state-by-state prompt-pay windows applicable to Quorum's licensed jurisdictions, with particular emphasis on jurisdictions where Quorum has experienced the greatest volume of prompt-pay failures.
Key topics include:
• A systematic review of state-by-state prompt-pay windows, identifying states with 30-day, 45-day, and 60-day payment deadlines following completion of the investigation. NYDFS Regulation 64 (11 NYCRR Part 216) requirements receive detailed attention given the anticipated NYDFS follow-up examination in Q1 2026, including the Regulation's specific requirements regarding written notification of claim determination, payment within 35 business days, and the detailed documentation required when claims are denied or partially paid.
• A root-cause analysis of the 74.2% timely payment rate, identifying the principal drivers of payment delays. Based on the Phase 1 assessment, the primary root causes include: (i) incomplete documentation requests that necessitate multiple rounds of correspondence with claimants; (ii) delayed supervisor approvals for payments exceeding individual adjuster authority limits; (iii) system processing backlogs in the claims management platform; and (iv) insufficient tracking mechanisms to alert adjusters to approaching statutory deadlines.
• Demonstration of the system-alert configurations and dashboard tools that have been developed as part of the technology/systems upgrade component of the remediation program. These tools include automated email and in-system alerts triggered at 50%, 75%, and 90% of the applicable prompt-pay deadline, as well as real-time dashboards that display each adjuster's portfolio of open claims organized by urgency and time remaining until the statutory payment deadline.
• Procedures for requesting and documenting legitimate extensions of claim payment deadlines where permitted by applicable state law, including the specific documentation that must be placed in the claim file, the notifications that must be sent to the claimant, and the supervisory approvals required before an extension can be invoked.
D. Module 3: Escalation Protocols and Supervisory Review
Module 3 addresses the new escalation framework and supervisory review requirements established in the Claims-Handling Timeliness Remediation Protocol. This module is critical to ensuring that systemic compliance failures — such as those that permitted the average acknowledgment time to reach 18.7 business days — cannot recur without triggering intervention by supervisory personnel.
The module covers:
• The new escalation triggers for claims approaching statutory deadlines. Under the revised protocol, automated alerts will be generated and directed to the assigned adjuster, the adjuster's supervisor, and the claims manager at the following intervals: 50% of the applicable deadline period (informational alert to the adjuster); 75% of the applicable deadline period (escalation alert to the adjuster and supervisor, requiring the supervisor to review the file status); and 90% of the applicable deadline period (critical escalation alert to the adjuster, supervisor, and claims manager, requiring immediate action and documentation of the reason for the delay).
• Supervisory review requirements for aged claims, including mandatory weekly review of all open claims that have exceeded 50% of the applicable acknowledgment or payment deadline, and mandatory daily review of all claims at or above the 90% threshold. Supervisors must document their review in the claims management system, including any corrective actions taken or instructions provided to the assigned adjuster.
• Documentation standards for escalated files, specifying the minimum information that must be recorded at each escalation level, including the reason for the delay, the actions taken to resolve the delay, the anticipated timeline for resolution, and the identity of the supervisor or manager who reviewed the file.
• An overview of the interaction between the claims department's internal operations and the statistical claims-file sampling methodology being implemented by Ridgeline Consulting Group, LLC under the direction of Sandra Whitfield, Managing Director. Claims adjusters and supervisors will be informed that, on an ongoing basis, a statistically significant random sample of closed claims files will be reviewed by Ridgeline's team using defined quality criteria. This post-training monitoring program is designed to verify that the training has produced sustained behavioral change and to provide early warning of any regression in compliance metrics. Understanding this monitoring framework is essential so that claims handlers recognize the ongoing nature of the compliance improvement effort.
E. Module 4: Documentation and Record Retention for Claims Files
Module 4 focuses on the documentation standards that claims files must meet to withstand regulatory examination scrutiny and the record-retention periods applicable in each of Quorum's licensed jurisdictions. This module directly addresses the lessons learned from the FL OIR examination, in which 74 of 625 sampled files (11.8%) were found to contain one or more deficiencies.
Topics include:
• Minimum documentation standards for claims files, including requirements for initial claim intake documentation, acknowledgment letters, investigation notes, coverage determination memoranda, payment processing records, denial letters with detailed explanations of the basis for denial, correspondence logs, and evidence of supervisory review. The module will reference the specific documentation standards set forth in the revised Claims-Handling Timeliness Remediation Protocol and the overarching requirements of the Market-Conduct Compliance Manual.
• A detailed review of the lessons learned from the FL OIR examination's 11.8% error rate, organized by the most common categories of deficiency. Based on the Phase 1 analysis, the most frequently observed deficiencies in the 74 flagged files included: (i) missing or undated acknowledgment letters (27 files); (ii) incomplete investigation documentation that did not support the coverage determination (19 files); (iii) payment processing delays without documented justification (16 files); and (iv) denial letters that failed to cite the specific policy provisions supporting the denial (12 files). Anonymized examples drawn from these categories will be used to illustrate both the deficiency and the corrective action.
• A summary of record-retention periods by state, referencing the state-by-state regulatory requirements matrix. The module will identify the states with the longest retention requirements and explain the rationale for applying a uniform retention period of seven years (which exceeds the maximum state-mandated period) as established in the revised Market-Conduct Compliance Manual.
F. Delivery Format and Schedule
Track 1 training will be delivered through a combination of live and asynchronous formats designed to accommodate the large training audience (~420 FTEs), geographic distribution across 14 offices, and multiple shift schedules:
• Two live webinar sessions, each approximately 90 minutes in duration, will be scheduled during Week 1 (November 17–21, 2025). Each session will cover Modules 1 through 3 of the Track 1 curriculum. The two sessions will be scheduled at different times of day (morning and afternoon Eastern Time) to accommodate participants in multiple time zones and on different shift schedules. Sessions will be repeated as needed to ensure adequate capacity for all 420 participants.
• One recorded on-demand module, approximately 60 minutes in duration, covering Module 4 (Documentation and Record Retention), will be published on Quorum's internal learning management system ("LMS") and available for asynchronous completion. This module must be completed by December 3, 2025, allowing two days before the Phase 3 certification sign-off deadline.
• Total training hours per participant: approximately 4 hours (1.5 hours live session + 1.5 hours live session or recorded equivalent + 1 hour on-demand module).
All live webinar sessions will be recorded and made available on the LMS within 24 hours of the live session, enabling participants who were unable to attend the live session to complete the material asynchronously while still receiving credit for completion.
V. TRAINING CURRICULUM — TRACK 2: ADVERTISING REVIEW AND FILING SOP
A. Scope and Objectives
Track 2 is designed to address the five advertising findings contained in the FL OIR final examination report and to remediate the systemic compliance gap that permitted 43 non-compliant digital ad creatives to be published and disseminated across Strathmore Systems, Meta (Kestrel Services Inc. and Northpoint Services Inc.) advertising platforms, and programmatic display channels over an approximately 32-month period from March 2022 through November 2024. Of the 43 non-compliant ad creatives, 31 (72.1%) were placed by Pinnacle Bridge MGA's in-house marketing team without being routed through QIIC's advertising compliance review process, representing a fundamental breakdown in the advertising compliance control framework.
The Track 2 curriculum is structured to achieve the following specific objectives:
1. Ensure that all marketing personnel across QIIC, QSU, and Pinnacle Bridge MGA understand the state-by-state advertising filing requirements applicable to Quorum's licensed jurisdictions, with particular emphasis on the four states with formal advertising findings (Florida, California, Illinois, and Ohio).
2. Train all marketing personnel on the centralized advertising compliance review workflow established in the Advertising Review & Filing SOP developed during Phase 2, which requires all marketing materials — including digital advertisements of every format — to be submitted to QIIC's advertising compliance function for review and approval prior to publication or dissemination.
3. Address the root cause of the Pinnacle Bridge MGA advertising compliance failure through a dedicated supplemental module that establishes mandatory pre-clearance procedures for all Pinnacle Bridge-originated advertising across all 34 states in which Pinnacle Bridge holds licenses.
4. Establish the framework for periodic audit and ongoing monitoring of advertising compliance, including quarterly review cycles, random sampling of published advertisements, and escalation and remediation procedures for post-publication identification of non-compliant materials.
Track 2 targets approximately 85 FTEs across QIIC, QSU, and Pinnacle Bridge MGA, including marketing managers, digital advertising coordinators, brand managers, creative directors, media buying specialists, and compliance liaisons embedded within marketing departments.
B. Module 1: Overview of State Advertising Filing Requirements
Module 1 provides a comprehensive overview of the state regulatory landscape governing insurance advertising, with a focus on the practical implications for Quorum's digital advertising operations. The module is designed to ensure that marketing personnel understand not only the specific filing requirements applicable to each jurisdiction but also the underlying regulatory rationale and the consequences of non-compliance.
Topics include:
• Classification of states by filing regime, including: (i) prior-approval states that require submission and approval of advertising materials before dissemination; (ii) file-and-use states that require submission of advertising materials before or concurrent with first use; (iii) use-and-file states that permit use of advertising materials with a subsequent filing requirement within a specified period; and (iv) no-filing jurisdictions that do not require affirmative filing of advertising materials but maintain substantive content standards that must be observed.
• Detailed requirements for the four states with advertising findings in the examination report:
• Florida: Fla. Stat. § 626.9541(1)(a) and (b) and applicable Florida Administrative Code provisions governing unfair methods of competition and deceptive acts, including specific prohibitions on misleading comparisons, incomplete disclosures, and use of testimonials without required disclaimers. Florida operates as a file-and-use jurisdiction for most advertising materials.
• California: Cal. Ins. Code §§ 790.03(b) and 10509.950 et seq. and CDI regulations governing insurance advertising, including specific requirements for rate comparison advertisements, disclosure of underwriting criteria referenced in advertisements, and the CDI's enforcement posture as articulated in the June 18, 2025 Order to Show Cause.
• Illinois: 215 ILCS 5/143.24a and 50 Ill. Adm. Code Part 919, governing advertisements of insurance, including definitions of "advertisement" that encompass digital media, requirements for prominence and legibility of disclosures, and filing requirements for insurer-originated and producer-originated advertising.
• Ohio: Ohio Rev. Code § 3901.21 and Ohio Adm. Code § 3901-6-13, governing unfair and deceptive acts in the business of insurance, including advertising-specific provisions relating to accuracy of policy descriptions, prohibited representations, and the Ohio Department of Insurance's advertising compliance guidelines.
• Digital advertising-specific requirements, including the application of traditional advertising regulations to online and social media advertising formats, rate-comparison rules as applied to digital display and search engine advertisements, required disclosures in space-constrained digital ad formats, and the regulatory treatment of programmatic advertising where placement is algorithmically determined.
• Consequences of non-compliance, with explicit reference to the $275,000 CTDOI civil penalty, the $180,000 FL OIR administrative fine, and the CDI Order to Show Cause as tangible examples of the regulatory and financial consequences that flow from advertising compliance failures.
C. Module 2: Centralized Advertising Compliance Review Workflow
Module 2 provides a step-by-step walkthrough of the new centralized advertising compliance review workflow established in the Advertising Review & Filing SOP developed during Phase 2. This module is the operational core of Track 2, designed to ensure that every marketing team member understands and can execute the mandatory pre-publication review process.
The module covers:
• The centralized review requirement: all marketing materials — without exception, including digital advertisements in all formats (search, display, social media, video, programmatic, email, and native content), print advertisements, direct mail pieces, website content, landing pages, and collateral materials — must be submitted to QIIC's advertising compliance function (overseen by Lena Fujimoto, Director, Market Conduct & Consumer Affairs) prior to publication or dissemination in any medium or jurisdiction.
• The submission and approval routing process, including: (i) how to submit materials through the centralized compliance queue within the content management system; (ii) required information that must accompany each submission (target states, intended publication dates, media channels, applicable product lines, and any rate or premium information referenced); (iii) the review and approval workflow, including initial compliance analyst review, legal review for materials flagged as high-risk, and final approval by the advertising compliance function; and (iv) documentation of the approval decision, including any required modifications to the submitted material.
• State-specific filing procedures that must be completed following internal compliance approval, including electronic filing via SERFF (System for Electronic Rate and Form Filing) for applicable jurisdictions, manual filing procedures for states that do not accept electronic filings, and tracking of filing status and regulatory responses.
• Turnaround-time expectations for the centralized review process: standard review turnaround of five business days for routine materials; expedited review turnaround of two business days for time-sensitive materials, subject to advance notification and approval by the advertising compliance function. Marketing personnel will be trained to plan advertising campaigns with sufficient lead time to accommodate the compliance review cycle without creating pressure to bypass the process.
• Expedited review procedures for genuinely urgent situations, including the documentation required to invoke the expedited process, the limitation on the frequency of expedited requests per team, and the post-publication review and filing procedures that apply when an expedited review is conducted.
D. Module 3: Pinnacle Bridge MGA-Specific Procedures
Module 3 is a dedicated sub-module specifically designed for Pinnacle Bridge MGA, LLC marketing personnel. This module addresses the unique compliance obligations and procedural failures that led to Pinnacle Bridge's in-house marketing team originating 31 of the 43 non-compliant digital ad creatives identified during the examination and subsequent review. Pinnacle Bridge marketing personnel are required to attend both the general Track 2 sessions and this supplemental Pinnacle Bridge-specific session.
Topics include:
• An explanation of the root cause of the Pinnacle Bridge advertising compliance failure: prior to the examination, there was no mandatory requirement for Pinnacle Bridge-originated marketing materials to be routed through QIIC's advertising compliance review process before publication. Pinnacle Bridge's MGA agreement with QIIC contained general provisions requiring compliance with applicable law, but did not establish a specific pre-publication routing requirement or designate a compliance checkpoint within Pinnacle Bridge's marketing workflow. This gap permitted Pinnacle Bridge's marketing team to develop, approve internally, and publish digital advertisements across multiple channels and jurisdictions without carrier-level compliance review.
• The new mandatory pre-clearance procedures for all Pinnacle Bridge-originated advertising across all 34 states in which Pinnacle Bridge holds licenses. Under the revised procedures, no Pinnacle Bridge marketing material may be published, disseminated, or submitted to any media platform or channel without first receiving written approval from QIIC's advertising compliance function through the centralized compliance queue. This requirement applies regardless of the advertising format, medium, target state, or dollar value of the media spend.
• The role of Pinnacle Bridge marketing team leads in the revised compliance workflow. Each Pinnacle Bridge marketing team lead is personally responsible for certifying that each piece of marketing material originated by their team has been submitted to the centralized compliance queue and has received documented approval before any publication order is placed. Team leads must maintain a log of all submissions and corresponding approval documentation.
• The interaction between Pinnacle Bridge's fintech distribution platform and carrier-level advertising compliance obligations. Pinnacle Bridge's digital distribution platform generates certain automated or semi-automated marketing communications (including email campaigns, retargeting advertisements, and landing page variations) that qualify as "advertisements" under applicable state insurance regulations. The module will clarify which categories of platform-generated communications are subject to the pre-clearance requirement and establish procedures for periodic batch review of template-based automated communications.
E. Module 4: Periodic Audit and Ongoing Monitoring
Module 4 establishes the framework for ongoing advertising compliance monitoring that will operate on a continuous basis following the completion of training. This module ensures that marketing personnel understand that compliance is not a one-time training event but an ongoing operational discipline subject to regular audit and review.
The module covers:
• Internal audit procedures for advertising compliance, including the scope and frequency of audits to be conducted by Quorum's internal audit function (under Neil Granger's oversight) and by the advertising compliance function itself.
• Quarterly review cycles in which a random sample of published advertisements across all channels and jurisdictions will be reviewed for compliance with applicable state requirements and the Advertising Review & Filing SOP. The quarterly review will include verification that all published materials received pre-publication approval through the centralized compliance queue and that all required state filings were completed.
• Escalation and remediation procedures for the post-publication identification of non-compliant materials, including: (i) immediate takedown protocols; (ii) assessment of the scope of the non-compliance (states affected, duration of publication, estimated consumer impressions); (iii) regulatory notification obligations, if any; (iv) root-cause analysis and corrective action documentation; and (v) reporting to the advertising compliance function and, where appropriate, to the General Counsel's office.
F. Delivery Format and Schedule
Track 2 training will be delivered through a combination of live and asynchronous formats:
• One live webinar session, approximately 120 minutes in duration, covering Modules 1, 2, and 4 of the Track 2 curriculum. This session is scheduled during Week 2 (November 24–28, 2025) and is open to all Track 2 participants across QIIC, QSU, and Pinnacle Bridge MGA.
• One Pinnacle Bridge-specific supplemental live session, approximately 60 minutes in duration, covering Module 3 (Pinnacle Bridge MGA-Specific Procedures). This session is scheduled during the same week and is mandatory for all Pinnacle Bridge marketing personnel. QIIC and QSU personnel with direct oversight responsibilities for Pinnacle Bridge's advertising activities are also encouraged to attend.
• One recorded on-demand module, approximately 45 minutes in duration, providing additional detail on state-specific filing requirements and practical filing demonstrations. This module will be available for asynchronous completion on the LMS by December 3, 2025.
• Total training hours per participant: approximately 3 to 4.5 hours, depending on whether the participant is affiliated with Pinnacle Bridge MGA (4.5 hours including the supplemental session) or with QIIC/QSU only (approximately 3 hours).
VI. TRAINING CURRICULUM — TRACK 3: CONSUMER COMPLAINT INTAKE, LOGGING, AND RESPONSE PROCEDURES
A. Scope and Objectives
Track 3 is designed to address the three complaint-handling findings in the FL OIR final examination report, which identified failures to log and respond to consumer complaints within statutory deadlines in three states during the examination period. Track 3 also addresses the broader systemic challenge reflected in the elevated complaint ratios across all three carrier subsidiaries, each of which exceeds the NAIC median.
The Track 3 curriculum is structured to achieve the following specific objectives:
1. Reduce complaint ratios across all three carrier subsidiaries toward the NAIC median of 0.82 per 1,000 policies in force. Current levels are significantly elevated: QIIC at 1.47 (79.3% above median), QSU at 0.93 (13.4% above median), and QLA at 1.12 (36.6% above median).
2. Ensure that all customer service representatives, complaint intake coordinators, and escalation managers understand and can execute the Consumer Complaint Response Procedures (Draft SOP) developed during Phase 2.
3. Address the root causes underlying the 2,847 total consumer complaints filed against all Quorum subsidiaries in calendar year 2024 and establish processes, workflows, and documentation standards designed to improve complaint-handling outcomes and reduce complaint volumes.
4. Establish a framework for root-cause analysis and continuous improvement that uses complaint data as a feedback mechanism to drive improvements in underwriting, claims, product development, and customer service operations.
Track 3 targets approximately 310 FTEs across QIIC, QSU, and QLA, encompassing customer service representatives who handle initial consumer contacts, complaint intake coordinators who log and classify complaints, and escalation managers who oversee complex or high-severity complaint investigations.
B. Module 1: Complaint Intake and Logging Standards
Module 1 addresses the initial intake and logging of consumer complaints, which the FL OIR examination identified as a critical control weakness. The examination found instances in which complaints were received but not logged into the complaint management system for days or weeks, resulting in delayed responses and, in some cases, total failure to respond within applicable statutory deadlines.
Topics include:
• The new uniform requirement that all consumer complaints must be logged into the complaint management system within 24 hours of receipt, regardless of the channel through which the complaint was received (telephone, email, postal mail, web portal, social media, or walk-in). This uniform 24-hour standard represents a significant tightening of the prior practice, under which logging timelines varied by entity and channel with no mandatory maximum.
• The complaint acknowledgment standard requiring that a written acknowledgment be sent to the complainant within 3 business days of the date the complaint is logged. The acknowledgment must confirm receipt of the complaint, identify the complaint reference number, provide the name and contact information of the assigned complaint handler, and set expectations regarding the timeline for a substantive response.
• The use of standardized complaint intake forms and classification taxonomy developed during Phase 2. The standardized intake form captures all information necessary to process the complaint (complainant identity, policy information, nature of the complaint, relief sought, and relevant documentation) while also categorizing the complaint according to a predefined taxonomy (claims-related, billing-related, coverage-related, service-related, product-related, or other). This classification taxonomy enables consistent complaint-trend analysis and regulatory reporting.
• System-entry requirements and data-quality standards, including mandatory fields that must be completed before a complaint record can be saved in the complaint management system, quality-assurance checks performed by complaint intake coordinators, and procedures for flagging incomplete or ambiguous complaint submissions for follow-up with the complainant.
C. Module 2: Response Timeline Compliance
Module 2 focuses on ensuring that substantive complaint responses are provided within the applicable statutory deadlines for each state in which Quorum operates.
Topics include:
• A review of state-by-state response deadlines as set forth in the state-by-state regulatory requirements matrix developed during Phase 1. Response deadlines vary by state and can range from 10 business days to 30 calendar days, with some states imposing additional requirements for interim status updates if the investigation cannot be completed within the initial response period.
• The operational standard of providing a substantive response within the most restrictive applicable state deadline, consistent with the approach taken for claims acknowledgment in Track 1. By targeting the most restrictive deadline, the training simplifies the compliance obligation for complaint handlers and eliminates the risk of inadvertently applying the wrong state's deadline to a multi-state complaint.
• Procedures for requesting extensions of complaint response deadlines where permitted by applicable state law, including the documentation that must be placed in the complaint file, the interim communication that must be sent to the complainant, and the supervisory approvals required before an extension request can be submitted to the applicable state department of insurance.
• Documentation requirements for each complaint file, including the complaint intake form, the acknowledgment letter, all investigative notes and correspondence, the substantive response letter, any subsequent communications with the complainant or the state department of insurance, and the final resolution documentation. The module will emphasize that complaint files are subject to regulatory examination and must be maintained at a standard sufficient to demonstrate compliance with all applicable requirements.
D. Module 3: Escalation Procedures and Regulatory Reporting
Module 3 addresses the internal escalation framework for complaint handling and the regulatory reporting obligations that arise when complaints reach certain thresholds or exhibit patterns that require heightened attention.
Topics include: