"Macquarie analysts expect insurers to keep lifting prices as new data shows claims inflation hitting 4.5 per cent across personal motor lines.
The analysts warn inflation expectations are escalating as large contracts are set to be renewed across the industry.
Analysis from the bank shows labour costs were topping 4.7 per cent in cost growth in the March 2022 quarter, while vehicle parts costs were also up 4.4 per cent.
This comes as Suncorp is set to negotiate a new fixed-price contract with smash repair group AMA for non-driveable claims after its earlier deal expired in June. The driveable repair claims contract will run until June 2023.
Macquarie said the outcome of these negotiations with AMA were "important for Suncorp and market averages" .
Analysts are also pointing to 10 per cent claims inflation in home lines, in a further escalation from already high inflation in earlier quarters.
Macquarie said for the moment both IAG and Suncorp were pricing their policies "ahead of claims inflation", supporting their underlying margins in the second half of this year.
But it warns personal lines of insurance will soon be next to face pricing hikes by all insurers "to keep margins flat."
