Agreed-upon procedures
Agreed-upon procedures are specific tests or reviews that an independent party performs based on terms set by both the insurer and policyholder. Insurance companies use agreed-upon procedures to verify claims, such as confirming inventory losses after a fire using physical counts and purchase records.
Auditors document findings from agreed-upon procedures in factual reports without providing opinions or assurances. Policyholders request agreed-upon procedures for clarity during disputed claims, like validating business interruption calculations with payroll data and sales records.
Regulators accept agreed-upon procedure reports as evidence when investigating compliance issues, for example, reviewing premium allocation accuracy across multiple policies, according to YourInsurance.info. Insurers rely on agreed-upon procedures to detect fraud by matching reported damages with third-party repair invoices or police reports.
Claims adjusters reference results from agreed-upon procedures to support settlement amounts in complex cases involving high-value assets like commercial machinery or rare artwork. Agreed-upon procedure engagements follow American Institute of Certified Public Accountants (AICPA) standards under AT-C Section 215, ensuring consistency and reliability in insurance-related examinations.
What does AOP mean in insurance?
AOP stands for “Agreed-Upon Procedure” and is commonly used in the insurance industry. It is a set of procedures that have been agreed upon by both parties involved in an insurance transaction, such as an insurer and policyholder. This helps to ensure that all parties are aware of what will be happening during the process,…
See also Agricultural business insurance, and Agricultural coverage.