إجمالي مرات مشاهدة الصفحة

2010/08/07

Misbah Kamal


A Note on Insurance Intermediation in the

Law of Dallaleen No. 64 of 1935

This article was published in the History of IRAQ blog on 29 July 2010 without the Arabic information under footnote 2.
http://historyofiraq.blogspot.com/2010/07/insurance-in-1935-law-no-64-of.html


In September 2008 I published a short study in Arabic entitled: "Concerning Intermediation and Insurance Intermediation in Iraq" in the Iraq Insurance Review blog http://misbahkamal.blogspot.com/2008_09_01_archive.html

In introducing the study I pointed out that it is "a preliminary incomplete study that needs to be developed." In making that statement, I was hoping that "colleagues in Iraq would contribute to aspects of the legal and economic role expected of insurance brokers in the structure of Iraq’s insurance market.” I also mentioned that “insurance intermediation, as a distinct profession is not known in Iraq’s business sector; there is no business culture associated with insurance intermediation but intermediation, in the broad sense, is not lacking in Iraq and in this context we have to recall intermediation in buying and selling real estate.”


Recently I have come across a piece of legislation entitled Law of Dallaleen No. 64 of 1935, confirming the validity of the comments that I have quoted above regarding the concept and practice of intermediation and its public circulation but more importantly the presence of insurance intermediation apparently as a distinct activity.

The English transliteration of this Law (قانون الدلالين) is Kanoon Al-Dallaleen. The word Dallaleen is the plural form of Dallal, which can be translated as auctioneer, insurance broker, stock broker, intermediary, middleman and estate agent. Literally, the Arabic word Dallal means one who guides (and any professional intermediary is expected to guide clients).

I have translated the Law to English in full, appended below, for the benefit of the non-Arabic reader and to use it for my commentary on selected aspects of the law in the context of insurance intermediation. From the perspective of insurance history in Iraq, it is an important piece of legislation.

Here, I am taking advantage of some of the provisions of this Law to re-state and refine the general idea of intermediation to which I referred in my earlier study in Arabic– namely, that insurance intermediation, albeit in a limited form, was known and was the subject of limited regulation in the 193os.

Because of the generic nature of the concept “Dallal” as applied in this law, I have opted for using the English transliteration of the Arabic word in its various forms.

Article 1 of this Law provides the following definitions:

"Delalah – al-Wassattah [mediation, intermediation, brokerage] for concluding contracts or facilitating civil or commercial transactions concerning movable and immovable property, bonds and [shipping/insurance?] policies[1] and banknotes of different types and other branches deriving from such transactions.

Dallal [intermediary, broker] – he who is engaged in intermediation as a profession.”

We note here that the word "Dallal" is explained by the word al-Wassattah "mediation, intermediation” which suggests that the two words are synonymous. We also note that Delalah, the activity of intermediation, according to article 2 of this law, is limited to natural persons, as the law makes no specific provisions for the registration of the Dallal as a corporate body.

Sub-Article 2- E requires that the Dallal is “Competent in reading and writing in Arabic or employs a person with such competence.” This is interesting as it points to promoting Arabic as a language of business. It also implies that the Dallal might be either illiterate or a foreigner who has no command of the Arabic language. Thus, to make up for the lack of language competency, the Dallal has to employ “a person with such competence.”

Article 3 mandates that the Dallal must register at the Chamber of Commerce in the region where he practices his business. The registration is annual and subject to renewal and updating the identity of the category(ies) of Delalah engaged in. Here we see the early role of law in consolidating the position of chambers of commerce as partners in regulatory activity.

Article 4 refers to the classification of Dallaleen by the Chamber of Commerce to five categories but these categories are not mentioned (we assume that there was an implementing instrument or regulation in this regard that we have not been able to trace). We also assume that Delalah [intermediation, brokerage] in insurance business was one of these five categories. We are encouraged to assert this view because Schedule B of Order Number 14 of 1936, based on Law of Dallaleen No. 64 of 1935, sets the level of fees for intermediation in Baghdad in respect of a plethora of activities. The following fees were set for insurance:

“Fire and Flood and other Insurance, excluding life insurance, 10% of the original premium. Life insurance, 25% of the total premium of the first year.”
The law also includes a few provisions on the organization of the Dellal’s business like bookkeeping, adherence to the designated category of activity for which he is licensed, i.e. not breaching the field of specialisation, etc (Article 6). Also, to be noted is the emphasis on trust and the penalties stipulated if it is breached (Article 8). This is a significant provision as it registers a basic regulatory principle underlying modern systems of protection for the insureds’ interest.

We can conclude from reviewing these selected provisions that Delalah/intermediation activity, including insurance intermediation, was known in Iraq in the 1930s if not earlier but was not properly regulated and thus required legislative intervention in the form of the 1935 law and the orders derived from it.

We are not able to determine the source of this law. It may well be the case that it was based on an English model. But this is only a guess and needs proper investigation.

It is useful to note that this law, under Article 15, repealed the Ottoman Dallaleen and Brokers Order dated 26-7-1304 [20 April 1889] and its Supplement dated 25-8-1306 [26 April 1889]. The word Brokers here is a literal translation of the word Simsareen.[2] Unfortunately, we were not able to trace this Order and its Supplement, dating back to the nineteenth century, to compare it with the 1935 law. We are not sure if insurance and insurance broking were covered by them

It is not enough to write history, and we do not claim to be doing so, by speculating and relying on legal texts alone. It is true that laws reflect existing conditions necessitating regulation and influencing the direction of business development, but that does not absolve us from researching the facts relevant to these conditions and the practices associated with them. We view these legal texts as indicators that shed some light on existing conditions, and pave the way for professionalisation of uncodified traditional practices in certain areas.

We concede thatprofessionalism does not always arise by the force of law as the history of some professions in the West in particular witness Professionalisation, through defining terms of entry, for example, developed from within the professions themselves. The promulgation of the Dallaleen Law points to the emergence of specialised activities in the service sector. One is inclined to the view that legislative intervention in regulating business activities contributes to shaping or re-shaping of existing practices. And this is why this particular piece of legislation, like others, is so significant.

However, despite the legal framework for regulating intermediation and as far as insurance is concerned, intermediation did not develop for reasons that need to be investigated. The activity, in its evolution in the 1950s and 1960s, was reduced to the work of agents who were tied to insurance companies that survives to this day but without much weight.[3]

The 1935 Law, however, survived for over four decades until it was repealed by the Delalah Law Number 58 of 1987. Significantly, article 2 of the new law defined four categories of intermediaries: estate agency, buying, selling and leasing vehicles, auctioneering and buying and selling agricultural and industrial products and other properties. Insurance intermediation was not included among them. By now, insurance intermediation has lost all legal recognition.

One wonders if records were kept by the chambers of commerce in Baghdad, Basra and Mosul. If records do exist, they would be of great value to economic historians in estimating the number of intermediaries, their specialist activities, identities, revenues, etc.

If our analysis is correct, then Law of Dallaleen No. 64 of 1935 would be the first of its kind in regulating insurance broking business in Iraq. But this has to be qualified by virtue of the existence of previous regulations: Dallaleen and Brokers Order dated 26-7-1304 [20 April 1889] and its Supplement dated 25-8-1306 [26 April 1889]. The word “Brokers” in the title (simsareen plural, singular: simsar) here might not necessarily stand for “insurance brokers.” This of course needs further investigation.

We hope that colleagues concerned with the history of insurance in Iraq, and generally with Iraq’s economic history, will follow-up this and other related topics.

Misbah Kamal
London July 2010
_______________________________________

English Translation of the

Dallaleen Law No. 64 of 1935

The original Arabic text of this law can be read by using this link:
http://www.iraq-ild.org/LoadLawBook.aspx?SC=260920059254324

We the King of Iraq

With the agreement of the Senate and the House of Representatives ordered the promulgation of the following law:

Article 1
The following words and expressions have the meanings set opposite thereto:

Intermediation (Delilah) – al-Wassatah [intermediation, brokerage] for concluding contracts or facilitating civil or commercial transactions concerning movable and immovable property, bonds and [insurance] policies and banknotes of different types and other branches deriving from such transactions.

Intermediary (Dallal) – he who has taken on intermediation as a profession."

Chamber of Commerce - Chamber of Commerce in the region where the Dallal practices his regular work.

Article 2
The Dallal must meet the following conditions:

A – must not be less than twenty one year of age and have Iraqi nationality.

B - Not to have been convicted of a felony or misdemeanour involving moral turpitude unless he has regained the rights denied to him (sic) [i.e. unless the conviction was spent].

C – Not made bankrupt unless he has restored his solvency.

D - Known for his integrity and good conduct.

E – Competent in reading and writing in Arabic or employs a person with such competence.

Article 3
The Dallal who meets the conditions set forth in Article 2 must register with the Chamber of Commerce and renew the registration annually and has a certificate evidencing his registration containing his photograph and the categories of Delalah for which he is licensed to practice.

Article 4
A – The Dallallon [plural of Dallal] are classified by the Chamber of Commerce into five categories and the Dallal can object to [his] classification by the Chamber within one year.

B – The Dallal pays an annual registration fee to be set by a directive.

C - Part of the year is considered [a full] year for the purpose of registration.

Article 5
A Dallal registered with the Chamber of Commerce is permitted to practice his business throughout Iraq.

Article 6
The Dallal must comply with the following obligations:

Smaller Class Three or lower Dallals are exempt from all or some of these obligations based on a special directive.

A - Maintain a register with numbered pages the first and last pages of which to be stamped and approved by the Chamber of Commerce without charge according to the form approved by the Chamber of Commerce after approval by the Minister of Finance. Transactions are to be entered in Arabic by using ink or copying pencil.

B – Enter all transactions brokered in the log book daily with their details and the result gained by such transaction.‏

C - Avoid erasing and deletion or tearing of a page from the contents of the log book.

D - Does not leave a space between lines or more than the usual space between one transaction and another.

E - Does not leave a blank page between the pages in which transactions have been entered.

F - Keep log books, that are full, for a period of not less than ten years from the entry date of the last transaction.

G - Presents the license to a court of law when the court so decides.

H – Presents the license, on demand, to the relevant departments upon their request.

I - Submits to the Chamber of Commerce a statement in writing if he wishes to leave the profession within a year.

Article 7
A – a person who engages in Delalah in professions that by law are not to be the subject of Delalah, or practises Delalah without registering with the Chamber of Commerce shall be penalised by a court of law initially by a fine not exceeding forty dinars, and when the same [offence] is repeated by a fine not exceeding sixty dinars, or by imprisonment for a term not exceeding three months.

B – A person who continues to engage in Delalah after the end of the license year and before the renewal of the license or before payment of the fee shall be penalised initially by a fine not exceeding twenty dinars and on recurrence by a fine not exceeding forty dinars, or by imprisonment for a term not exceeding one month.

C – The Dallal who violates one of the obligations mentioned in Article 4 shall be penalised by the court initially by a fine not exceeding five dinars and on recurrence by a fine not exceeding ten dinars.

D – The Chamber of Commerce, at the request of the Minister of Finance or the stakeholders, bars the Dallal from doing business for a period not exceeding one year if he has neglected one of the obligations in Article 6 and that in addition to the sentence imposed by the court.

Article 8
The name of the Dallal will be permanently removed from the register of the Chamber of Commerce if he has been in breach of trust or has damaged the interests of those for whom he has acted as a broker or used deception and cheating in his dealings, after he is proven guilty in court and [the verdict] publicised in the press.

Article 9
The testimony of a Dallal who has engaged in Delalah without a licence does not count in court in respect of the transactions that he has brokered.

Article 10
It is not permissible for the Dallal to conduct business for his own account, and if in breach will be punished in accordance with paragraph B of Article VII.

Article 11
It is not permissible for government departments or municipalities to use a Dallal who is not registered with the Chamber of Commerce.

Article 12
The Dallal collects a fee not exceeding the ratios specified by a special directive.

Article 13
This law also applies to the Dallal who works for a sole trader or company or more than one company.

Article 14
The provisions of this law apply in areas, designated by a special bylaw, that have chambers of commerce.

Article 15
The Dallaleen and Simsareen Order dated 26-7-1304 and its Supplement dated 25-8-1306 is repealed.

Article 16
This Law shall become effective on 1 April 1936.

Article 17
The Minister of Finance and [the Minister of] Justice shall implement this law.

Written in Baghdad on the twelfth day of the month of Ramadan in the year 1354 and the eighth day of the month of December 1935.

Ghazi
Rasheed Ali, Deputy Minister of Justice
Raouf Al-Bahrani, Finance Minster
Yaseen Al-Hashimi, Prime Minister

Published in the Official Gazette number 1479 on 23-12-1935.

NOTES

 The present paper is an extensively revised and expanded version of the original Arabic that I have posted to the Iraq Insurance Review blog. I wrote this and other isolated article to remind the reader that knowledge of the past is important not only to preserve memory of the past but also to stress that accumulation is a pre-condition for progress. The ideology of ‘destroy and rebuild’ has placed a heavy toll on the advancement of Iraq.

[1] The bolisat, the plural form of bolisah, can be translated as “policies” plural of “policy” as in insurance policy. It seems that the word "bolisat" (plural) and "bolisah" (singular) was commonly used at that time as the word "Bolesat" is mentioned in the Insurance Companies Act No. 74 of 1936 in conjunction with word "sukkook” (instruments, documents) as follows:

“Article 3

1. The Minister of Finance must suspend the license ….. or cancel the license in each of the following circumstances:

A - If the [insurance] company or its agent violated the provisions of Law No. 74 of the year (1936) in any way.

B - if it is conclusively proven that one of the sukkook-holders (sic.) [policyholders] bolesat al-Tameen [insurance policies] in Iraq has made a claim against the insurance company, which is not contested, and the company or its agent neglected the claim for ninety days or if the agent or the company declined the implementation of a peremptory judgement.” [Emphasis added]

Here we see the use of the Arabic word “sukkook" (plural of “sukk") and the foreign word "bolesat [policies] of insurance" as synonymous.

The word "sukk" is used in common parlance in Iraq as equivalent to the words "cheque" (bank cheque) and "document" as in the expression “sukk al-Entidab" (the Mandate Document or Instrument."

But the word “Bolisah” is also common in shipping as in Bolisat al-Shahan (Bill of Lading).

Based on the above the word Bolisat under Article 1 of the Dallaleen Law of 1935 does not, strictly speaking, stand for insurance policy. This linguistic digression is meant to show that idiomatic use of words was not rigorously applied.

[2] For an extended comment on word simsareen (plural of simsar: middleman, broker, intermediary), readers of Arabic can refer to my article “Concerning Intermediation and Insurance Intermediation in Iraq," Iraq Insurance Review, http://misbahkamal.blogspot.com/2008/09/blog-post.html

Here is the relevant section in Arabic:

استطراد لغوي
الأسماء المتداولة للوسيط عديدة، فالدارسون الأكاديميون في الغرب يميلون إلى استخدام مصطلح وسطاء التأمين insurance intermediaries في حين يستخدم العاملون في قطاع التأمين وكذلك العملاء مصطلح insurance broker كما نجد تعبير middleman أيضاً. وفي العالم العربي نجد استخدام مصطلحات سمسار التأمين أو السمسار أو الوسيط أو وسيط تأمين/إعادة التأمين، أو السمسرة/الوساطة في وصف النشاط.

ويبدو أن بعض هذه المصطلحات مستقاة من أصول غير عربية. ففي الفارسية يرد تعريف لمصطلح "سمسار" في قاموس فارسي- إنكليزي بأنه الشخص الذي يتاجر بالسلع المستعملة dealer in second-hand goods

(Haïm’s One-Volume Persian-English Dictionary, Farhang Moāser, [1953]) ويذكر التعريف أن الكلمة عربية من أصل فارسي. ويرد في نفس القاموس استخدام مصطلح "دلاّل" كمقابل للوسيط broker, middleman, dealer وفي التركية يرد استعمال قومسيونجي (بالتركية: komisyouncu) و دلاّل ( بالتركية:(simsar, komisyouncu, tellal للتعريف بالوسيط. وكلمة القومسيونجي، وكان دارجاً في العراق، هو الشخص الذي يقدم الخدمات لقاء عمولة commission وهو الأجر الذي يتقاضاه الوسيط من شركة التأمين.
وبحسب Dictionary Online Etymology فإن تاريخ كلمة الوسيط broker في اللغة الانكليزية هو:

“Broker 1377, from Anglo-Norm. brocour "small trader," from Anglo-Fr. abrokur "retailer of wine, tapster," perhaps Port. alborcar "barter," but more likely O.Fr. brocheor, from brochier "to broach, tap, pierce (a keg)," from broche "pointed tool" (see broach (n.)), giving original sense of "wine dealer," hence "retailer, middleman, agent." In M.E., used contemptuously of peddlers and pimps.” http://www.etymonline.com/index.php?term=broker

قطعاً لن يرتاح وسيط التأمين لوصفه بالديوث أو لربط مهنته بـ "سمسرة الفاحشة" حسب تعريف قاموس المورد: انكليزي عربي لكلمة pimp (الواردة في النص الإنكليزي أعلاه) كما كان مستعملاً بالإنكليزية بين القرنين الثاني عشر والرابع عشر.
ويعرّف القاموس المحيط السِّمْسارُ كما يلي:

السِّمْسارُ، بالكسر: المُتَوَسِّطُ بين البائِعِ والمُشْتَرِي ج: سَماسِرَةٌ، ومالِكُ الشيءِ، وقَيِّمهُ، والسَّفيرُ بين المُحبِّينَ. وسِمْسارُ الأرضِ: العالِمُ بها.

http://www.baheth.info/all.jsp?term=سمسار

ونلاحظ هنا فكرة التوسط بين البائع والمشتري. كما نلاحظ فكرة العلم بالشئ وكما يرد في التعريف: العلمُ بالأرض. وهذا العلم بالأشياء، بالمعنى الواسع، هو ما يميز الوسيط المحترف في الأسواق المتقدمة عن غيره. وتعبير السمسرة شائع الاستعمال في العديد من البلدان العربية. ويرد في لسان العرب تعريف الدَّلاَّل، تحت مدخل دلل، بمعنى الشخص الذي يحمل عِلماً ويدل الناس عليه. يقول ابن منظور:
"وفي حديث علي، رضي الله عنه، في صفة الصحابة، رضي الله عنهم: ويخرجون من عنده أَدلَّة؛ هو جمع دَلِيل أَي بما قد علموا فيَدُلُّونَ عليه الناس، يعني يخرجون من عنده فُقَهَاء فجعلهم أَنفسهم أَدلَّة مبالغة. ودَلَلْت بهذا الطريق: عرفته، ودَلَلْتُ به أَدُلُّ دَلالة، وأَدْلَلت بالطريق إِدْلالاً. والدَّلاَّل الذي يجمع بين البَيِّعَيْن، والاسم الدَّلالة والدِّلالة، والدِّلالة: ما جعلته للدَّليل أَو الدَّلاَّل. وقال ابن دريد: الدَّلالة، بالفتح، حِرْفة الدَّلاَّل."
http://www.baheth.info/all.jsp?term=دلال

وهنا أيضاُ نشهد أفكارا لها علاقة بالوساطة: الجمع بين البيِّعين (البائع والمشتري)، وكذلك المعرفة (العلم بالشئ)، والتعريف بالطريق (الإدلاء عليه). ونحن نميل إلى إشاعة استخدام تعبير وسيط التأمين/إعادة التأمين لحياديته وخلوه من صفات قيميه بدلاً من تعبير سمسار الذي أخذ بعداً سلبياً في العراق الجديد يرتبط بإنجاز المعاملات الرسمية في دولة مستغرقة في الفساد.

[3] Misbah Kamal, Munther Al-Aswad & Fouad Shamkar, “Insurance Agencies in Iraq: a preliminary attempt at stimulating research” (in Arabic), Iraq Insurance Review, January 2010, http://misbahkamal.blogspot.com/2010/01/1.html.

Mohammed Al-Kubaisi, “Insurance Agencies: an approach to understanding insurance service,” (in Arabic) Iraq Insurance Review, January 2010, http://misbahkamal.blogspot.com/2010/01/blog-post.html





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