Insurance Trust Gap with Younger Generations

The insurance industry is experiencing record growth. Premiums are rising, new technologies are transforming claims processes, and more products are available than ever before. However, consumer trust, especially among younger generations, is eroding.

Millennials and Gen Z are more skeptical of insurers than any previous generation. According to the Society of Actuaries’ Perceptions Across Diverse Populations report (2024), only about 49% of Gen Z consumers trust health or dental insurers, compared to nearly 70% of Boomers. Younger generations associate insurance with complexity, bureaucracy, and unmet promises. While the industry sees itself as a safety net, many younger consumers see it as a necessary evil, or worse, an unnecessary expense.

If the insurance industry wants to sustain growth and relevance in the decades ahead, it must confront this trust gap head-on. The reasons behind it are clear and, fortunately, so are the solutions.

The Roots of Distrust

Insurance has long struggled with perception problems, but for younger consumers, the barriers go deeper than outdated stereotypes.

To start, there’s a knowledge gap. Insurance literacy in the U.S. is strikingly low: fewer than 30% of adults can accurately explain how deductibles, premiums, and policy limits interact. Without a solid understanding, many people assume insurers profit primarily by denying claims. That assumption is not grounded in fact, but perception often outweighs reality.

Additionally, young policyholders who have filed claims often report frustration with slow processes, confusing documentation, or lack of transparency. In a world of instant banking, one-click refunds, and on-demand everything, waiting weeks for updates on a claim feels frustratingly slow.

Finally, there’s a lack of meaningful education about insurance. Most high schools and colleges don’t teach the basics of risk management or coverage types. Instead, younger consumers learn from social media, and that’s where the problem deepens.

Social Media Narratives

Today’s financial influencers dominate platforms like TikTok, YouTube, and Reddit, shaping how millions view insurance. While some provide sound advice, many viral posts focus on negative experiences: denied claims, confusing exclusions, or “scam” stories that rack up millions of views.

This creates a powerful narrative that positions insurance companies as untrustworthy. Even when misinformation spreads, it sticks because it aligns with existing frustrations.

Ironically, though younger consumers are constantly exposed to financial content online, they’re not necessarily more engaged when it comes to their own coverage. A 2024 report on auto insurance shopping trends found that only 19% of Gen Z respondents compare auto insurance annually, compared to 42% of Millennials. That suggests that even with endless digital information at their fingertips, many younger consumers aren’t taking proactive steps to understand or optimize their insurance. This is because it feels too complex or not worth the effort.

There is an opportunity for insurance companies to actively participate on social media. Carriers and professionals who use social media to explain coverage, demystify claims, or highlight real success stories can help rewrite the narrative and rebuild trust in the process.

A New Attitude Toward Fraud

Another part of the trust gap is shifting moral boundaries. A 2022 Coalition Against Insurance Fraud survey found that younger consumers are less likely to view insurance fraud as a serious crime. In fact, more than one in five Gen Z respondents said they’d consider exaggerating a claim if they felt justified in doing so.

This is because when trust is low, people tend to rationalize bad behavior. Some see “gaming the system” as fair play against a company they believe wouldn’t treat them fairly anyway. It’s not that young people are inherently less ethical; rather, it’s that perception drives justification.

This attitude poses a real risk for claims professionals. If fraud tolerance grows, so do losses. But it also presents a call to action: to reestablish fairness, clarity, and communication in every consumer interaction.

Bridging the Gap: How the Insurance Industry Can Rebuild Trust

Rebuilding trust with younger consumers is about authenticity and accessibility. Here’s how the industry can start:

• Educate early and often: Partner with schools, nonprofits, and digital platforms to promote insurance literacy. A generation that understands coverage will see its value.
• Simplify and clarify: Drop the jargon. Use clear, transparent language in every policy document, website, and communication.
• Engage online, genuinely: Be present on platforms where consumers are, including TikTok, Instagram, and Reddit, but speak their language. Humanize claims stories and highlight positive outcomes.
• Humanize every claim: For many policyholders, the claims process is their only interaction with an insurer. When that experience is empathetic, timely, and transparent, it becomes the strongest trust builder possible.
• Lead with purpose: Show how the industry protects families, supports small businesses, and helps rebuild communities. People trust what they understand and connect with emotionally.

Final Thoughts

Today, one of the insurance industry’s greatest challenges is managing perception. Younger generations are skeptical, not because they don’t need insurance, but because they don’t see its human side.

The good news is this can change. By meeting consumers where they are digitally, culturally, and emotionally, the industry can transform skepticism into confidence. Rebuilding trust won’t happen overnight, but it starts with clear communication, authentic engagement, and a commitment to transparency.

Because in the end, insurance isn’t just about policies and payouts; it’s about people. When people trust the industry that’s designed to protect them, everyone benefits.

Rebuilding trust starts with reliable decisions. Partner with Ethos to make it happen.

Check out our sources:

“2024 U.S. Auto Insurance Trends Report.” Insurance Thought Leadership, 2024, https://www.insurancethoughtleadership.com/auto-insurance/what-gen-z-wants-auto-insurers.

“Adults Age 30 and Younger Overestimate Life Insurance Cost by 10–12 Times.” LIMRA, 2025, https://www.limra.com/en/newsroom/news-releases/2025/adults-age-30-and-younger-overestimate-life-insurance-cost-by-1012-times/.

Coalition Against Insurance Fraud. The State of Insurance Fraud 2022: Consumer Attitudes and Behaviors, CAIF, 2022, https://insurancefraud.org/.

Cude, Brenda J., and Yanfang Zhang. “Willingness to Commit Insurance Fraud: Examining Age, Education, and Ethics.” Journal of Consumer Affairs, vol. 59, no. 1, 2025, pp. 1–20, https://onlinelibrary.wiley.com/doi/10.1111/joca.70015.

“Insurance Literacy in America: Gaps and Opportunities.” National Association of Insurance Commissioners (NAIC), 2024, https://content.naic.org/article/only-about-1-4-gen-z-adults-can-define-deductible-and-co-pay.