Anchoring Notice: Alaska Supreme Court Requires Insurers to Obtain a USPS Certificate of Mailing for Non-Renewal Notices—Strict Statutory Compliance under AS 21.36.260 and New Guidance on Pre-Judgment Interest in Workers’ Compensation Policies

Anchoring Notice: Alaska Supreme Court Requires Insurers to Obtain a USPS Certificate of Mailing for Non-Renewal Notices—Strict Statutory Compliance under AS 21.36.260 and New Guidance on Pre-Judgment Interest in Workers’ Compensation Policies

1. Introduction

Travelers Property Casualty Company of America v. Keluco General Contractors, Inc., et al. (Opinion No. 7774, June 27 2025) is a significant decision from the Alaska Supreme Court that resolves two recurrent issues in insurance litigation:

  • What constitutes adequate proof that an insurer mailed a notice of non-renewal under AS 21.36.260 and AS 21.36.240?
  • From what date should pre-judgment interest run when an insurer wrongfully denies workers’ compensation coverage?

The dispute arose after Keluco’s workers’ compensation policy with Travelers lapsed without Keluco’s knowledge. When an employee was later injured, Keluco discovered the lapse and sued its insurance agent, who in turn sought to allocate fault to Travelers. Ultimately Keluco asserted direct negligence and breach-of-contract claims against Travelers. The superior court granted partial summary judgment to Keluco, finding that Travelers never obtained a USPS certificate of mailing and therefore failed to give the statutorily required notice of non-renewal. The court also set pre-judgment interest running from the date Travelers mailed the defective notice. Travelers appealed.

2. Summary of the Judgment

  • Strict Compliance with Mailing Statute. The Supreme Court affirmed that AS 21.36.260 requires an insurer to “obtain a certificate of mailing from the United States Postal Service.” Internal mailing logs or use of a Detached Mail Unit (DMU) are not acceptable substitutes. Failure to obtain the certificate renders the would-be non-renewal ineffective; the policy therefore remains in force.
  • Breach of Contract. Because the policy’s Alaska Cancellation and Non-Renewal Endorsement incorporated statutory duties, Travelers’ statutory violation also breached the contract, and its failure to defend and indemnify Keluco for the employee’s injury constituted a second breach.
  • Dismissal of Contribution Claim. The Court upheld dismissal of Travelers’ contribution claim against the insurance agent, noting that Alaska’s several-liability framework (AS 09.17.080) still permits allocation of fault to a settling party.
  • Recalculation of Pre-Judgment Interest. The Court reversed on interest, holding that accrual must begin on the date the injured employee first became entitled to benefits (September 20 2017), not on the earlier date Travelers mailed its defective notice nor on the later date Keluco sued Travelers.

3. Analysis

3.1 Precedents Cited and Their Influence

  • Blood v. Kenneth A. Murray Insurance, Inc., 151 P.3d 428 (Alaska 2006)
    —Blood allowed “substantial compliance” where the insurer proved mailing by introducing the returned envelopes, thereby accomplishing the purpose of proof.
    Impact here: Travelers relied on Blood to argue substantial compliance, but the Court distinguished Blood because physical USPS confirmation existed in that case, whereas Travelers had none.
  • Circle De Lumber Co. v. Humphrey, 130 P.3d 941 (Alaska 2006)
    —Established that interest on unpaid workers’ compensation benefits runs from the date benefits are due.
    Impact: Guided the Court’s selection of September 20 2017 as the proper interest-accrual date.
  • Morris v. Morris, 724 P.2d 527 (Alaska 1986) and subsequent cases (ERA Helicopters, Liimatta, Beech Aircraft)
    —Articulated general rules for pre-judgment interest and the prohibition on double recovery.
    Impact: Confirmed that interest should compensate only for lost use of money and should not duplicate other damages.

3.2 Legal Reasoning

a) Statutory Interpretation. The Court followed its sliding-scale approach, examining text, legislative history, and policy:

  • Text: The statute uses mandatory language—“shall … obtain a certificate of mailing.”
  • History: In 1987 the Legislature tightened the statute, replacing a mere “proof of mailing” standard with the current certificate requirement. The amendment clearly sought independent USPS verification.
  • Policy: Strict compliance protects small businesses and employees from undisclosed coverage gaps; allowing self-certification would let insurers defeat that policy goal unilaterally.

b) Rejection of Substantial Compliance. Because Travelers could not supply any USPS verification (no stamp, signature, or returned mail), the Court held that “substantial compliance” would impermissibly erode the Legislature’s 1987 amendment.

c) Contract Theory. The Alaska Endorsement undoubtedly made statutory compliance a condition precedent. Non-renewal was ineffective; therefore the policy remained effective on the accident date, creating contractual liability for defense and indemnity.

d) Pre-Judgment Interest. The Court harmonized contract-law principles with workers’ compensation policies, selecting the injury date because that is when the insurer’s obligation to pay benefits ripened and Keluco lost use of its money.

3.3 Potential Impact

  • Insurance Industry.
    • Insurers operating in Alaska must now adopt procedures that always produce a USPS certificate (or electronic equivalent expressly approved by USPS). Reliance on DMU logs or vendor affidavits is perilous.
    • Cost-benefit analyses that previously tolerated occasional mailing disputes must be revised; statutory penalties include continued policy coverage and potentially large indemnity obligations.
  • Producers and Agents. Agents should audit carrier practices; failure to ensure compliance could expose agents to negligence claims, although fault can still be allocated under AS 09.17.080.
  • Litigation Strategy. Expect more summary-judgment motions focusing on mailing mechanics. Plaintiffs will cite Travelers v. Keluco to demand strict proof of the certificate; defendants may try to procure retroactive USPS records, but without that proof the statute is unforgiving.
  • Broader Legal Landscape. The decision underscores Alaska’s trend toward strict statutory enforcement in regulated industries and may influence courts interpreting similar “proof of mailing” statutes nationwide.
  • Pre-Judgment Interest Calculations. The Court’s harmonized approach offers a blueprint for cases involving overlapping contractual and statutory obligations—interest starts when benefits are due, not merely upon breach of a procedural duty or filing of suit.

4. Complex Concepts Simplified

  • Certificate of Mailing (USPS Form 3817/3877). A USPS-issued receipt, postmarked and often stamped, confirming the date an item was accepted for mailing. It is distinct from certified mail or proof-of-delivery services.
  • Detached Mail Unit (DMU). A special onsite USPS facility inside large mailers’ premises. While postal clerks verify bulk mailings, the DMU does not automatically generate an individual certificate of mailing for each item.
  • Non-Renewal vs. Cancellation. Cancellation terminates an existing policy mid-term; non-renewal means the insurer elects not to extend coverage at the next anniversary date. Different statutes govern each.
  • Summary Judgment. A procedural device allowing a court to resolve a claim where no material facts are in dispute and one party is entitled to judgment as a matter of law.
  • Allocation of Fault / Several Liability (AS 09.17.080). Each defendant is responsible only for its proportionate share of damages. Settling parties can be placed on the verdict form for fault allocation even if they are no longer in the case.
  • Pre-Judgment Interest. Interest awarded to compensate the plaintiff for the lost use of money between the date the claim accrued and the date of judgment. Alaska uses a statutory rate (currently 7.5% for this period).

5. Conclusion

The Alaska Supreme Court’s decision in Travelers v. Keluco establishes a bright-line rule: insurers must obtain a bona fide USPS certificate of mailing when sending required notices of non-renewal under AS 21.36.260. Anything less—such as an insurer’s own mailing log—fails to satisfy the statute and leaves coverage intact. The Court also clarifies that pre-judgment interest in workers’ compensation insurance disputes accrues from the date the employee’s benefits become due, not from earlier procedural missteps or later litigation milestones. Collectively, these holdings reinforce consumer protection, promote regulatory clarity, and ensure fair compensation by aligning interest awards with the actual economic harm suffered.

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