Dear Mr. Enriquez,
I am a partner in the Privacy & Data Security practice group at Calderwood & Harkness LLP, 51 West 52nd Street, 34th Floor, New York, NY 10019. Our firm represents Quorum Insurance Holdings Corp. ("Quorum"), a Delaware corporation headquartered at 400 Constitution Plaza, Suite 2200, Hartford, CT 06103 (Nasdaq: QIHC).
I write to provide formal notice of a claim under Quorum's primary cyber-liability insurance policy issued by Atlas Mutual Insurance Company, as identified below.
**I. Policy Identification**
- **Policy No.:** CYB-2023-041587 - **Policyholder / Named Insured:** Quorum Insurance Holdings Corp. - **Coverage Period:** January 1, 2023 – January 1, 2024 - **Per-Occurrence Limit:** $15,000,000 - **Self-Insured Retention (SIR):** $2,500,000
The policy was placed through Quorum's cyber-insurance broker, Whitmore Risk Advisors Inc. Sandra Whitmore-Kim of Whitmore Risk Advisors is copied on this correspondence.
**II. Claim Summary**
Full details are set forth in the formal Notice of Claim letter attached to this email. By way of summary:
On or about April 21, 2023, Quorum received notification from its third-party claims-processing vendor, Palomar Data Solutions, Inc. ("Palomar"), that Palomar had discovered a security incident on April 18, 2023 involving unauthorized access to Palomar's network environment. The unauthorized access is believed to have originated on or about March 14, 2023 through exploitation of a known vulnerability (CVE-2023-0669) in Palomar's GoAnywhere MFT file transfer appliance.
The incident involves the potential exposure of personally identifiable information, protected health information, and financial data belonging to Quorum policyholders and claimants. The scope of the compromise and the number of affected individuals remain under active investigation.
Calderwood & Harkness was engaged by Quorum on May 4, 2023 to manage the incident response. On May 5, 2023, Graystone Forensics LLC was retained under the attorney-client privilege umbrella to conduct the forensic investigation into the nature and extent of the unauthorized access.
**III. Expected Categories of Covered Costs**
Quorum anticipates that the following categories of costs will be incurred in connection with this incident:
- Forensic investigation costs (Graystone Forensics LLC) - Consumer notification costs (printing, mailing, and call center operations) - Credit monitoring and identity theft protection services for affected individuals - Crisis communications and public relations - Regulatory notification and defense costs - Legal fees and expenses (Calderwood & Harkness LLP)
Based on preliminary assessments, costs are expected to exceed the $2,500,000 self-insured retention and will likely implicate the primary policy layer. The total amount of covered losses is not yet determinable and will be supplemented as the investigation progresses.
**IV. Claim Number and Administrative Requests**
We understand that precautionary notice may have already been communicated through Whitmore Risk Advisors, and we ask that you confirm whether Claim No. CYB-CLM-2023-05892 has been assigned or, if not, that Atlas Mutual assign a claim number at its earliest convenience. In addition, we respectfully request the following:
1. Written acknowledgment of receipt of this notice; 2. Identification of the assigned claims adjuster and any applicable panel counsel or coverage counsel requirements; and 3. Prompt communication of any consent requirements under the policy with respect to Quorum's retention of forensic investigators, notification vendors, or crisis communications consultants, given the time-sensitive nature of the ongoing response.
Quorum understands its obligations under the policy regarding cooperation, consent to retain counsel and vendors, and periodic reporting, and intends to comply fully with those obligations.
**V. Excess Carrier Notice**
For Atlas Mutual's information, precautionary notice is being provided separately to Pinnacle Surplus Lines Insurance Corp. under Policy No. XS-CYB-2023-7812, the excess carrier sitting above the Atlas primary layer. Quorum does not currently anticipate that losses will reach the excess layer.
**VI. Reservation of Rights**
Quorum reserves all rights under the policy, and nothing in this notice is intended to limit any coverage available under the policy terms. Quorum will provide supplemental information and documentation as the investigation progresses.
**VII. Contact Information and Next Steps**
I serve as the primary billing partner contact for insurance-related matters in connection with this incident. My partner Kevin Ostrowski (copied) is the responsible partner overseeing the day-to-day incident response. We ask that all coverage correspondence be directed to Calderwood & Harkness at the addresses provided below.
We would welcome the opportunity to schedule an introductory call with you and the assigned claims adjuster to discuss the claim and coordinate coverage matters. Please do not hesitate to reach out at your convenience to arrange a mutually suitable time.
Thank you for your prompt attention to this matter.
Respectfully,
**Rachel Bernstein** Partner, Privacy & Data Security Calderwood & Harkness LLP 51 West 52nd Street, 34th Floor New York, NY 10019 Tel: (212) 455-7200 Email: rbernstein@calderwoodharkness.com
**Attachment:** Notice of Claim Letter to Atlas Mutual Insurance Company, dated May 8, 2023 (notice-of-claim-atlas.docx)
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