Controversial plans to introduce a risk-based global insurance capital standard will face “significant challenges”, according to the Geneva Association.

The International Association of Insurance Supervisors (IAIS) wants to develop the standard by 2016 and implement it in 2019.

But the Geneva-based think tank has urged caution, while the US National Association of Insurance Commissioners (NAIC) has expressed “serious concerns”.

“It is clear that there will be significant challenges to the creation of a global capital standard for insurers, particularly within the timeframe proposed,” the Geneva Association said.

The think tank comprises up to 90 CEOs from the world’s leading insurers and reinsurers.

Developing global capital standards for other financial service sectors has taken many years, because both “direct and indirect consequences” must be assessed, Geneva Association Secretary-General John H Fitzpatrick warns.

“We acknowledge that the IAIS may need to take incremental steps towards achieving this overall goal.”

However, the think tank says it is committed to working on initiatives such as the global capital standard.

The IAIS, also based in Switzerland, says a sound capital and supervisory framework is essential to support financial stability and protect policyholders.

“From the financial crisis, we learnt that our global financial regulatory regime should be more robust and comprehensive in scope, and jurisdictions should share a commitment to global standards,” IAIS Technical Committee Chairman Michael McRaith said.

NAIC CEO Ben Nelson says US state insurance regulators “continue to have serious concerns about the timing, necessity and complexity of developing a global capital standard, given regulatory differences around the globe”.

He says the group will remain engaged to ensure any global standard augments “strong” US capital standards.

The NAIC represents insurance regulators from US states and territories.