The Interplay of Governance and Life Insurance Development in the European Union: Insights from Old vs. New Member States before and during COVID-19

The political, legal and administrative framework within a society, forgathered through good governance measures, plays a significant role in the economy. Life insurance is responsive to manifold factors, including a good governance framework. The general objective of this research is to assess the direct, indirect and overall interlinkages between the good governance indicators - expressed by the Worldwide Governance Indicators - and life insurance dimensions – measured by life insurance penetration in Gross Domestic Product and life insurance density - on distinctive panels of the European Union countries - old and new Member States. The methodological approach consists in applying two advanced econometric techniques, Structural Equation Modelling and Gaussian Graphical Models, to a compiled dataset, considering before and during the COVID-19 pandemic period, namely 2007-2020. The expected results reveal specific implications for each component of Worldwide Governance Indicators on life insurance dimensions, jointly with poverty, education and earnings obtained, for each panel considered, new and old European Union Member States. The results are keener for the old Member States than the new ones, in case of insurance penetration, while for the insurance density, good governance would imply more pronounced effects for the new European Union countries. Therefore, we set distinctive policies/strategies for the proper functioning of the life insurance market in connection with good governance aspects.