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Tribal Fund: Old insurance system of Arabia
By Muhammad Al-Sulami
Published in The Saudi Gazette on 19 - 11 - 2008

Old Arabia may have ventured on life, health, and even auto insurance needs long before modern insurance companies came into being in the Kingdom through “Tribal Fund.” In its current financial system, the fund seems to shoot down the competition from insurance giants. It is defined and marketed as a fixed small amount of money that can save tribesmen in troubled times.
Although extinct in its original form where tribesmen would deposit an agreed amount of money every month with a treasury trustee for any emergency case that would afflict a member of the tribe, the fund operates in a modern way through the current banking system now, said Abdullah Jaber Al-Bugaili, a tribal leader. Wherever the tribe member is, he can deposit his share into the tribe's bank account, he said. A tribe member is still a cherished part of it regardless of physical proximity, he added.
The fund is then administered by the tribal council for development or charitable purposes. The fund also helps in case of compensation for car crash or blood money required by a tribe member to pay.
Tribesmen have to pay their monthly dues to benefit from the fund, said Sheikh Mughli Mastorri, a tribal fund trustee.
If the money needed to be raised is more than what the fund has, more money will be collected from the tribe members to meet the demand, he added.
The tribal fund has survived the flourishing insurance industry in the Kingdom in many ways. Sheikh Mastorri said a tribe member was demanded by another tribe to pay SR300,000 in compensation for damages incurred in a car accident by uninsured motorist of his tribe, but “It was so much that we asked for a court decision on that.” The court reduced the amount to only SR50,000 and it was fully paid from the tribal fund, he said. Soon, all tribe members paid back the SR50,000 to guarantee continuous availability of money, he said.
Mutlaq Al-Otaibi, a member of a large Arab tribe, said the tribal fund is more than just a compensation dispenser. It provides free-interest loans to tribesmen planning to get married or have to pay back a debt.
But times have now changed a little with the new auto insurance companies, said Captain Hamid Al-Sahafui, chief of traffic accident department in Yanbu. Now 90 percent of drivers have auto insurance which would pay for incurred damages, leaving only 10 percent of the drivers in need of the tribal fund, he said.


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