Paul Sabanes and Michael Oxley originated the Oxley Act (SOX); it was created in response to the Enron, WorldCom, and Tyco scandals, which defrauded investors due to compromised financial reporting. The lawl was enacted to protect consumers from subsequent incidents due to financial inaccuracies. Many health insurance companies recognize the advantages of SOX compliance and have initiated steps voluntarily to maintain their reputations, reassure and protect investors, ensure financial responsibility, and demonstrate efficiency and efficacy.

A name is validated by its reputation and has immeasurable value. Health insurance providers are held to a higher standard; investors require validation and justifification of financial stability. Therefore, in an effort to establish or maintain credibility, many health insurers voluntarily initiate SOX compliance procedures and protocols. They are accountable to regulatory agencies such as the Department Of Health and Human Services, the Office of the Inspector General, and the National Association of Insurance Commissioners (NAIC) who champion the apparent relevance and applicability of SOX stipulations to health insurance companies and tax-exempt entities. These agencies require information regarding auditing procedures that are instituted to guarantee accountability. Health insurance companies recognize the positive aspects and effects on profit margins and investor revenue that result from establishing a Section 404 procedure that renders voluntary SOX compliance a rational, effective, and responsible undertaking.

It has been aptly stated and validated that SOX compliance, an intensive and costly effort, has consequential benefits to the insurer. Erroneous financial reporting and compromised accuracy in financial documents reports causes investor insecurity regarding the stability and compromises the company's reputation and integrity. For example, difficulty often arises from an inability to reconcile health care provider invoices with disbursements, usually originated from a third party administrator or TPA, and the corporate financial department. This fragmented financial profile of disbursements is inaccurate, incomplete, and results in financial statement errors. These transactions are not immediately recorded in the ledger and can result in duplicate entries. Additionally, there may be a breakdown in invoicing, deductions, and inaccurate financial spreadsheets. An efficient, ongoing, voluntary SOX compliance procedure would reveal these inconsistencies as the STAS70 auditing form exercises control over these errors, result in investigation, mitigation, and correction before the financial documents are created.

Finally, voluntary SOX compliance provides financial responsibility by utilizing a continuous evaluative and financial reporting protocol and an interrelation atmosphere that includes the Board of Directors, financial auditors, and corporate senior management. Directors and officers can certify and validate financial reports, inspire investor confidence, and confirm the financial security of the health insurance company because the documents are accurate, thorough or complete, and authentic.