New Zealand general insurers are pressing their regulator, the Reserve Bank of New Zealand, to amend regulations on consumer credit insurance so it is not classed as life insurance.

The general insurers say that defining consumer credit insurance as life insurance will compel them to establish statutory funds and apply different solvency standards to what is a small part of their business.

They have said they will put the policies in run-off or otherwise dispose of them.

The Insurance Council of New Zealand (ICNZ), which has made a submission to the Reserve Bank on behalf of Allianz, IAG, Lumley and Vero, contends that consumer credit insurance should not be categorised as life insurance as the policies are generally low value and short term and do not have any investment component.

The council is seeking an amendment to the regulations that are part of the new insurer licensing system coming into force this year.

The Reserve Bank has accepted that consumer credit contracts that pay on death and disability can be excluded from the definition of life insurance, but has not excluded policies that pay on redundancy, bankruptcy or business interruption.

A Reserve Bank spokesman told insuranceNEWS.com.au the bank is reviewing the matter.