Disputing Poverty Capital, Reproducing Urban Inequalities: Auto Insurance, Militias, and Car Theft in Brazil

By Deborah Fromm and Luana Motta

This essay is part of Emergent Conversation 13, ILLICITIES: City-Making and Organized Crime

Car traffic in São Paulo. São Paulo is a car-dependent city that feeds many legal and illegal markets. Photo source: https://twitter.com/radiobandnewsfm/status/827117740917940224/photo/1.

In Brazil, approximately 500,000 vehicles are stolen per year.[1]  Central to urban mobility in São Paulo, cars are useful analytical objects for considering the materiality of cities within an analysis of illicit city-making and urban governance.[2] Car theft is perceived as a significant security problem in Brazil, but less discussed is how car theft intertwines legal/illegal and formal/informal markets and actors, the security industry, and public safety issues. As well as feeding the illegal auto parts market, car theft puts many economic circuits into operation, fostering the expansion of property protection markets, the sale of insurance policies, and payments for private security agents. Car theft through insurance mediation also creates demand for the automobile industry. Compensation paid by insurance companies makes it possible for theft victims to buy new cars, in contrast to legal sales on the used car market,which generate much lower returns for vehicle owners.

Auto insurance in Brazil is an expensive service targeted to the middle and upper classes that own newer vehicles. Low-income classes cannot generally afford to insure their cars. These consumers are not served by the traditional insurance industry, and have sought to protect their assets in local cooperatives—many of which are run by police, militias, or armed groups. In this fashion, the poor constitute a particularly important and profitable market—“poverty capital”—important to the very economic mechanisms that  simultaneously  concentrate wealth and produce unequal and violent cities (Roy 2010).

Ignition modules used in car theft.  Picture taken during fieldwork in an insurance company. Photo by Deborah Fromm, 2018.

In this post we examine car theft, insurance, and milia activity in Brazil to explore how licit and illicit actors co-produce cities and dispute order-making (Feltran 2020; Müller 2019; Motta 2019). We analyze disputes over a proposed bill to criminalize so-called “vehicle protection” policies sold by small- and medium-sized cooperatives—labeled by brokers and large insurance companies as “pirate insurance” or “parallel insurance.” The case here invites us to reflect on conflicts between global financial elites and local political-economic groups, including criminal groups. We then consider ways in which structural advantages and resources accumulate, thereby reproducing and intensifying urban inequalities.

The expansion of investment and accumulation frontiers into low-income markets is at the center of global capitalism (Roy 2010). people don’t have a lot of money individually, but they are so numerous that in the aggregate, they constitute massive untapped markets for global corporations. Little has been written about dominant economic groups pursuing the criminalization of low-level players who traditionally operate in poverty markets as a strategy to conquer new market niches or to preserve their market dominance (Rangel 2019; Fromm 2019; Bähre 2014). Criminalization indicates a radicalization of processes of resource accumulation, and violence is integral to this strategy. It is not by chance that we analyze the participation of militias acting alongside small associations or local elites as well as the rewriting of laws by the ruling class to redirect the use of state violence. We argue that urban conflict, sometimes violent, is interwoven with political and economic conflicts that involve unequally positioned actors central to the economy as well as peripheral actors linked to low-income markets.

Parallel Insurance

“Vehicle Protection is not an insurance/safe. Do not enter this trap. The savings are not worth it”. Online campaign folder organized by insurance brokers.

It has always been virtually impossible for Brazil’s poorest to buy insurance from large financial institutions, and they have opted to buy property insurance from local groups or cooperatives, often run by individuals from their own communities. Vehicle protection is sold by so-called “mutual associations” spread throughout the country. These associations set up contracts for mutual responsibility that offer protection to all involved, in which association members share costs arising from claims as may occur in a given month. As such, it is a system that works on the basis of solidarity among its members through the socialization of risks.

Automobiles are the highest growth market for these cooperatives, and insure against the risks posed by theft, robbery and collision. Vehicle protection prices are on average 70 percent less than the typical insurance policies offered by large insurance companies. Some cooperatives even include free installation of vehicle tracking, life insurance, and funeral assistance as part of contracts. In addition to lower costs and supplementary services, unlike traditional insurers, these associations do not perform credit checks on members. Even those considered unacceptably high risk cases by traditional insurers (the highly indebted, defaulters, drivers of trucks and old cars, residents of neighborhoods with high theft rates, etc.) are welcome in the cooperatives.

A direct clash between conventional insurance and the vehicle protection sector is inevitable, as they compete for this market niche. What advantages do insurance companies have in the coming battle that associations lack? For one, the resources to criminalize their opponent. Mutual associations say they are being pursued by SUSEP (Superintendência de Seguros Privados), the federal agency that regulates the insurance sector—which is controlled by representatives of large companies. While mutual associations market themselves as more inclusive and more democratic since they accept the and the “excluded,” and offer protection to those that are more “victimized” and “vulnerable,” traditional insurers position themselves as victims of illegality and piracy.[3]

Unfair Competition? Or a More Democratic Market?

Police car and gun at the border between Brazil and Bolivia. The border is a destination for cars stolen in Brazil to be exchanged for cocaine. Photo by Gabriel Feltran during collective fieldwork with the authors, 2018.

Faced with the expansion of vehicle protection, actors in the traditional insurance industry have argued that it is a parallel or marginal activity that functions only where enforcement is absent and that engages in unfair competition because cooperatives are not subject to the same rules as insurance companies. Insurance companies argue they bear high compliance costs not borne by cooperatives. They argue these costs significantly impact the value of their products, making them less competitive compared to the shadow market. Compliance with the rules is beneficial to the insurance sector and protects the businesses involved—and most of the time the rules are created by themselves.

In our interviews with traditional insurance industry representatives,  they claimed that the members of Congress who support the associations are “mafiosi.” Although it is necessary to understand this claim as part of a market dispute, it is not completely unfounded. In Rio de Janeiro, the recovery of stolen vehicles is a profitable business for the militias linked to police groups. Investigations have confirmed some of these police/militia connections to the mutual associations that offer vehicle protection[4]. And there is no doubt that private companies, staffed by police networks, recover vehicles for insurance companies. Usually these small car or cargo recovery companies are owned by retired police officers who pay the active police in cash for their help in recovery work for private companies. The connections between the private security industry in Brazilian metropolises and the police forces is a well-known issue discussed in the literature (see, for example: Garmany and Galdeano

As was clear from our informal conversations with former police officers and owners of these types of small recovery businesses, they have the experience, knowledge and personal relationships embedded in poor communities that insurance companies do not have. These skills allow them to take more risks and compete in the low-income market with traditional insurance companies.

In 2016 a congressman and evangelical pastor drafted a bill to formalize and regulate vehicle protection and protect it from SUSEP “persecution.” [5] However, after contentious debate, another congressman, an ally of the insurance brokers, was appointed as the bill’s rapporteur and quickly made his disapproval clear.[6] The bill was shelved. In response to the bill, the brokers’ congressman quickly proposed a bill of his own that would criminalize the activities of such associations. This bill would hold associations to the same standards and regulations imposed on traditional insurers by SUSEP, and make small mutual associations economically unviable.

Making Unequal Cities

A new building of a car insurance company at São Paulo inner city, near the degraded area known as Crackland.

Not everything always goes as the dominant actors expect, however. In  2018, we visited the office of Antônio Paulo, the retired CEO of a European insurance company located in Alphaville. Alphaville is a well-known, upscale, planned community on the outskirts of São Paulo built in the 1970s[7]. Known for its luxurious residential gated communities and high-end commercial buildings a significant portion of the city’s corporate elite has migrated there. Alphaville represents the genesis of the fortified enclaves discussed by Caldeira (2000). It is famous for its complex projects that aim to produce away from and protected against the violence and other problems common to the metropolises of the Global South.

Antônio Paulo maintains a personal office on the 10th floor of a commercial building. The sophisticated architecture of the office is divided into three different spaces by glass partitions. We were conducted by his secretary to a larger room decorated with art-work and high-end furniture.

The ever-cordial Antônio Paulo invited us to sit on the sofa in the back room and his secretary brought us each a glass of water and a cup of coffee. As she served us, Paulo asked if we had trouble finding his office. He sighed with relief when we said we had only come from Campinas. Although a longer journey as the crow flies, coming from the highways avoids the ever-present congestion between the most central areas of São Paulo and Alphaville. Some executives even prefer to travel by helicopter to avoid the heavy traffic. São Paulo is known as the city with the largest helicopter fleet in the world.

Two months before our visit, in October 2018, the presidential elections produced a victory for Jair Bolsonaro, a candidate of the extreme right supported by the military, the police, militias and religious organizations, most notably evangelical churches. In the months leading up to the election, Antônio Paulo met with all the presidential candidates to present the insurance industry’s legislative priorities, including the criminalization of informal types of insurance. In the first round election, the candidate of Antonio Paulo and his peers performed poorly. They subsequently chose to support the extreme right candidate, Bolsonaro, as a vote against the Labor Party, despite Bolsonaro’s support base being more aligned with vehicle protection , including police officers and militias . In the final stretch of the election, Bolsonaro was supported by other financial elites like Paulo. Antônio Paulo shared with us the discomfort he felt about Bolsonaro’s associations with vehicle protection and their congressmen. In addition to dealing with losses caused by organized vehicle theft, those who can afford to commute home by helicopter after a day of work in the financial sector now fight for market share with informal associations based in the urban peripheries where residents are hassled by low-level cops and  militias.  Through car theft and debates about what constitutes insurance, conflict between very different social groups has become politically and economically significant, and is ongoing. These groups have made the National Congress a battlefield for their arguments about defining the lines between legal and illegal, marginal and official, democratic and undemocratic, conventional and innovative, legitimate and illegitimate, just and unfair. Tilly (1998) observes that such classifications and binarisms are central to the reproduction of durable inequalities. With reference to these durable inequalities, this dispute is not just an economic dispute about the exploration of the low-income market niche; it is also a dispute about urban governance. The contest to exploit poverty capital is a political dispute over   how market competitors will be regulated at the street-level and how state violence will be used. Criminalization serves as an instrument to control wealth distribution and the reproduction of inequalities. In this sense, conflicts between licit and illicit actors as they seek to control poverty capital are at the center of urban conflict in contemporary Brazil.

Deborah Fromm is a PhD candidate in Social Anthropology at the University of Campinas and was a visiting researcher  at Centre for Urban and Community Research (CUCR) at Goldsmiths College, University of London. She is a researcher of the Centre for Urban Ethnography at the Brazilian Centre for Analysis and Planning (CEBRAP). Deborah studies the expansion of the insurance industry in Brazil and is concerned with the effects of privatization of public security and social protection on urban inequalities. She works with an ethnographic approach.


Luana Motta is a sociologist. She has a PhD in Sociology from the Federal University of São Carlos. She is a professor at the Federal University of São Carlos, and coordinator of the NaMargem (InMargins) – Center for Urban Research (UFSCar). Her work is focused on urban conflict, public policies, violence and youth.


[1] According to data from the Brazilian Forum on Public Security (Fórum Brasileiro de Segurança Pública), 456,819 vehicles were stolen in 2013; 513,023 in 2014; 514,535 in 2015; and 552,139 in 2016. According to statistics from the National System for Information on Public Security (Sistema Nacional de Informações de Segurança Pública – SINESP), between 2015 and 2019, 1,103,606 robberies and 1,139,961 thefts were registered, which represents, respectively, an average of 106.6 and 110.12 vehicles for each group of 100 thousand inhabitants.

[2] See Willis (2017) and Feltran (2019). And Dewey (2012) about the Buenos Aires example.

[3] See, for example, “Proteção veicular atende público excluído pelo seguro automotivo”, 21/11/2017, G1 Globo, available at: https://g1.globo.com/minas-gerais/especial-publicitario/proauto/noticia/protecao-veicular-atende-o-publico-excluido-pelo-seguro-automotivo.ghtml .

[4] See “Aliadas a cooperativas de seguros, milícias faturam com a recuperação de veículos roubados”, April 20, 2019, O Globo, available at: https://oglobo.globo.com/rio/aliadas-cooperativas-de-seguros-milicias-faturam-com-recuperacao-de-veiculos-roubados-23611889.

[5] The congressman is a deputy from Rio de Janeiro and founder of an evangelical church with 80 branches around the world. Known for being in favor of the “traditional Brazilian family” and defending “gay conversion therapy,” he has occupied the posts of Secretary of Human Rights and Secretary of Public Security. His stance is very emphatic in  defense of police violence: “I am in favor of human rights for the right humans,” he once said.

[6] “On its merit, we can say that this system of ‘property protection,’ like the well-known and illegal ‘vehicle protection,’ is being disseminated willy-nilly, irregularly and illegally in various locations around the country […]. Thus, the parallel activity of exploiting products of an insurance nature takes place in the form of unfair and predatory competition against the traditional insurance market itself.”, Report of the Legislative Chamber (PRL1 CCJ PL 5523/2016), available at: https://www.camara.leg.br/proposicoesWeb/fichadetramitacao?idProposicao=2162117. Is this quote from that debate? If so, cite the debate record.

[7] To protect our interlocutors, all the names are pseudonyms.

Works Cited

Caldeira, Teresa. 2000. Cidade de Muros: Crime, Segregação e Cidadania em São Paulo. São Paulo: Editora 34.

Bähre Erik. 2014. “A Trickle-Up Economy: Mutuality, Freedom and Violence in Cape Town’s Taxi Associations.” Africa84(4), 576-594.

Dewey, Matías. 2012. “Illegal Police Protection and the Market for Stolen Vehicles in Buenos Aires.” Journal of Latin American Studies 44(4): 679–702.

Feltran, Gabriel. 2019. “(Il)licit Economies in Brazil: An Ethnographic Perspective.” Journal of Illicit Economies and Development 1(2): 145-154.

Feltran, Gabriel. 2020. The Entangled City: Crime as Urban Fabric in São Paulo. Manchester: Manchester University Press.

Fromm, Deborah. 2019. “Creating (Il)legal Markets: An Ethnography of the Insurance Market in Brazil.” Journal of Illicit Economies and Development 1(2): 155-163.

Motta, Luana. 2019. “Conhecer, classificar e intervir: Práticas e discursos de policiais-professores sobre os jovens vulneráveis na Cidade de Deus.” Dilemas – Revista de Estudo do Conflito e Controle Social 12 (3): 627-646.

Müller, Frank Ingo. 2019. “Securing the Home: Crime, State Sovereignty and Social Housing in Medellín.” European Review of Latin American and Caribbean Studies 107: 95-115

Rangel, Felipe. 2019. “Problem and Power: Informal Commerce Between Repression and Enterprisation.” Journal of Illicit Economies and Development 1(2): 183-192.

Roy, Ananya. 2010. Poverty Capital: Microfinance and the Making of Development. Abingdon, UK:  Routledge.

Tilly, Charles. 1998.  Durable Inequality. Berkeley: University of California Press.

Willis, Graham Denyer. 2017. “City of Clones: Facsimiles and Governance in São Paulo, Brazil.” Current Sociology 65(2): 235-247.

Wilson, Dean and Weber, Leanne. 2008. “Surveillance, Risk and Preemption on the Australian Border.” Surveillance & Society 5(2): 124-141.

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