rate of 40 %. the vast potential in sukuk market in the international financial system indeed represents the crest of a new wave of innovation in islamic finance and is very much part of the globalisation process in islamic finance. sukuk musyarakah and ijarah, which command the broader global acceptance, represents the majority of global sukuk issuances. as part of the on going internationalisation of islamic finance has been the development of the supporting international financial architecture. of significance, is the establishment of the islamic financial services board ( ifsb ) in 2002 to set the prudential standards for islamic finance, and the accounting and auditing organization for islamic financial institutions ( aaoifi ) that was established in 1990. the importance of these international standard setting institutions has been their role in the harmonisation of prudential and accounting standards across the different jurisdictions. more importantly is their role in instituting international best practices in the global development of islamic finance. it is these concerted efforts to develop robust international best practices in the prudential and supervisory framework that will ensure the resilience and long term sustainability of the islamic financial industry. with globalisation also comes enhanced interdependence. while the strengthened interlinkages can be expected to bring about a more efficient allocation of capital across borders which in turn would result in lower the cost of capital, it has also resulted in the potential for the transfer of risks across different jurisdictions. this underscores the need to ensure the quality of financial globalisation. while the intrinsic nature of islamic finance encourages risk management and provides confidence through explicit disclosure and transparency, the new risks resulting from globalisation needs to be taken into account. this is to ensure that the islamic financial institutions have the capacity to manage the risks and that the regulatory authorities have the necessary instruments at its disposal to respond to any destablising implications. emergence of new set of challenges the enhanced international dimension of islamic finance has thus brought about a new set of challenges. the emergence of more diverse islamic financial institutions and the expended development of islamic financial markets have intensified the development of sophisticated islamic banking, takaful and capital market intermediaries. this has also resulted in the creation of sophisticated and complex structured financial instruments including hybrids of debt - equity structures. the increased competition has not only intensified the pace of innovation in products and services, but also of the operational processes and delivery channels. these developments have contributed to the increasing complexity of the risks profiles

savings rates exceeding 30 % of gross national product for most countries in asia, raises the potential for long - term sustainability of domestic consumption spending. this trend has also supported increased intra - regional trade, investment and tourism that is reinforcing the growth prospects in the region. the evolving trends and encouraging growth prospects in our respective regions present tremendous opportunities for the insurance and reinsurance industry. of significance is that the global insurance industry on the whole has remained resilient throughout the current financial crisis. the overall aggregate financial position of insurers in the crisis affected countries have continued to be strong, and generally not severely affected by liquidity pressures or exposures in the credit derivatives markets. earlier losses by insurers in financial market activities had resulted in a shift to " back - to - basics " models, focusing on core underwriting business instead of heavily relying on investments as the main source of earnings. the industry had also benefited from the subsequent upturn in the pricing cycle which has fortified the capital position of insurers and provided the support to maintaining sound underwriting standards. these conditions have placed the industry on a much stronger position to withstand the challenges emanating from this global financial turmoil. domestic and external conditions are however expected to remain volatile for some time. significant uncertainties will persist in the international financial markets and the broader global economic conditions. these conditions will continue to pose significant challenges to the insurance industry. in this environment, maintaining strong capital buffers and sound risk management is even more imperative to ensuring the continued resilience of the insurance industry. with the adoption of solvency ii in europe and its influence on solvency regimes in other jurisdictions, more countries, including malaysia, have now moved to adopt more riskaligned capital regimes. this needs to be reinforced by substantive improvements in risk management practices, greater alignment between business strategy and risk, and greater appreciation by boards and senior management of insurers on risk issues given the growing complexity and increasing interconnectedness of financial markets and financial sector players. the insurance industry has progressed significantly over the years and is well - positioned to supporting both the recovery process and future growth potential of the economy. as emerging economies rebalance with greater emphasis on private consumption, the social safety net will need to be strengthened, with insurance and pensions now having a greater role. an ageing population will also become an issue in the future. globally, the number of the aged population that is aged 65 and above is expected to grow dramatically by 2050. such