In this guest post, Dr Deborah Fromm explores the intersections of finance and urban violence in Brazil, based on her research project The Business of Urban Security: Insurance and Illegal Protection in Violent Cities. Developed during her USF International Fellowship at LSE.
Urban Violence and the Industry of Protection in Brazil
The project ‘The Business of Urban Security: Insurance and Illegal Protection in Violent Cities’, funded by the Urban Studies Foundation International Fellowship scheme and developed at the Department of Geography and Environment at the London School of Economics and Political Science, contributes to addressing some gaps in social knowledge on urban violence issues, risk assessment strategies and property protection in Latin American cities.
Mentored by Prof Gareth Jones, it mainly proposes the publication of some of my PhD research findings in the format of two academic articles. The research explores the rise of novel forms of global accumulation surrounding urban crime, alongside the involvement of financial elites and institutions in violence and illegal markets. By examining these dynamics with a deep empirical basis, the project sheds light on the financialisation of security and its far-reaching social impacts, providing fresh insights into how finance reshapes urban environments and security practices.
The project uniquely integrates the analysis of security issues with the financialisation of everyday life approach (Langley, 2008; Van der Zwan, 2014), exploring how coercion and the use of force intersect with finance, through insurance policies. My research question is: How do financial markets intersect with urban crime and violence in the everyday life of the global protection industry?
Source: Photos taken by the author.
This booming global protection industry offers financial products and private security services worldwide and has many political and economic effects. This industry is characterised by acting in the grey areas of legal and illegal markets and practices (Ruggiero, 2015; Gambetta, 1996; Varese, 2001) integrating into the business legitimate financial institutions with informal private security providers, militias, and criminal groups (Fromm, 2023 and forthcoming; Garmany and Galdeano, 2018). In global markets, there are the spheres of production, logistics, and trade of goods. Private and public protection services are of fundamental importance throughout the entire supply chain, but above all in the regulation and governance of markets themselves (Varese, 2001).
This ethnographic research also reorients the empirical and theoretical focus of international literature on insurance and private security towards Euro-American contexts (O’Malley, 2012; Horan, 2021) and brings Global South cities to the theoretical and analytical picture. In present-day Brazil, banks and insurers offer financial protection against urban crime, with an increasing variety of insurance policies shaped by coverage options, the geographical patterns of urban violence, and the socio-economic profile of the insured. Since at least the 1980s, there has been a growing range of insurance policies, including cover for auto theft, residential properties, smartphones, scams, and even ‘stray bullet’ incidents. Premiums vary according to the level of coverage offered, catering to both affluent and low-income individuals. The development of these products is influenced by insurance policies predominantly available in the USA and the UK, yet they function within a landscape of intense urban tension.
In this tense and unstable context, to guarantee financial and property protection, risk underwriting and actuarial knowledge are usually not enough and need to be combined with unofficial negotiations with corrupt police officers and criminals. The ‘Business of Security’ project shows empirically how contemporary financial markets also need operators of violence. For example, insurers need clandestine private security providers to recover stolen assets and reduce their costs of operation in violent cities. This is an important empirical and theoretical contribution to the field of security and urban studies, which has a significant gap in the comprehension of the role insurance companies play in urban governance and illegal market regulations, particularly in contexts of a very contested urban order.
Policing entrepreneurialism between finance and violence
Brazil’s major urban centres have a thriving illicit economy driven by vehicle and cargo theft. The ethnographic fieldwork (2017-2022) was conducted in a context where protection markets were grappling with what they referred to as a cargo theft crisis. This crisis peaked between 2016 and 2017, with Brazil recording 23,364 and 24,941 incidents, respectively, according to data from the Fórum Brasileiro de Segurança Pública. In “normal times,” the number of incidents ranges between 10,000 and 15,000, already positioning Brazil as one of the most dangerous countries in the world for truck cargo transport. Nearly 80% of these cases occur in the country’s most urbanised region, particularly along routes connecting the states of São Paulo and Rio de Janeiro.
Vehicle theft is also concentrated in the metropolitan areas of Brazil’s southeastern region (Feltran 2022), with approximately 1,000 cars stolen daily. Insurers estimate that 7 out of 10 stolen vehicles are covered by insurance. The country has an established market for the recovery of stolen assets, allowing insurers to either return these goods to policyholders or sell them at auctions to recoup some of their claim-related costs (see: Pimentel & Pereira, 2022). Public servants, particularly police officers, play a significant role as key actors in these private security markets (see also: Durão, Larkins & Argentin, 2023).
The success of entrepreneurial ventures in a pluralised security landscape stems from the blurred boundaries between public and private roles, along with their force capital (Martin, 2013). This ambiguity has been recognized in global studies as a defining feature of the expansion of protection markets and private policing across various national contexts. Diphoorn (2015) introduces the concept of ‘twilight policing’ in her ethnographic study of armed response in Durban, South Africa, highlighting the continuum between public and private, as well as state and non-state actors, in security provision. Durão et al. (2023) illustrate how the governance model within Brazil’s contemporary private security industry reinforces police power, positioning it hierarchically above civilian guards and vigilantes. The power and profitability of these security actors arise from their ambiguous position between market and state functions, despite the legal prohibition of such overlap under Brazilian law.
This is the argument developed in the article ‘Public Security, Private Interests: Insuring Urban Violence Risks in Contemporary Brazil’ (under review), which will discuss in detail how these small companies and their services operate between violence, the street world, and big financial institutions. Services can include armed escort, investigating crimes, organising clandestine operations in territories with armed control, offering tracking and monitoring technologies, paying bribes to public officials, and negotiating with national and, where necessary, international police forces and criminals. Anything necessary to recover stolen goods. These small and medium-sized companies, more or less formalised, have become important intermediaries between the world of financial business and the world of the street and crime. Their main resource is violence, but also police information and networks from the public apparatus.
And what if these violent intermediaries begin to challenge major financial players’ businesses by offering clandestine insurance policies directly to vast segments of the urban population? This would elevate their entrepreneurial ventures into the financial sector and significantly strengthen their capacity for economic accumulation. The social and political dynamics of this process, as well as its impact on urban order, will be explored in the article ‘Financial Pirates in the Tropics: The Legal and Political Battles Between Auto Insurance Companies and Armed Groups in Urban Brazil’, the second publication arising from the USF International Fellowship.
In conclusion, this study emphasises the role of insurers in managing urban order and positions insurance within the broader dynamics of the political economy of urban security, taking into account, empirically, the grey areas between legal and illegal protection markets. By focusing on the social mechanisms that blur these legal-illegal boundaries, it is hoped to move the discussion on urban violence in Latin American cities beyond approaches overly focused on poverty and marginality, towards a more relational perspective on conflicts over the appropriation of urban wealth.
References cited
Diphoorn, T. G. (2015). Twilight policing: Private security and violence in urban South Africa. University of California Press.
Durão, S., Larkins, E. R., & Argentin, P. (2023). In the shadows of protection: Brazilian police in private security. Policing and Society, 34(1-2), 42-58.
Feltran, G. (Ed.). (2022). Stolen cars: a journey through São Paulo’s urban conflict. John Wiley & Sons.
Fromm, D. (Forthcoming). Public Security, private interests: Insuring urban violence risks in contemporary Brazil.
Fromm, D. (2023). Insurance technopolitics: Car theft, recovery, and tracking systems in São Paulo. Security Dialogue, 54(1), 39-53.
Garmany, J., Galdeano, A. P. (2018). Crime, insecurity and corruption: Considering the growth of urban private security. Urban Studies, 55(5), 1111-1120.
Gambetta, D. (1996). The Sicilian Mafia: The business of private protection. Harvard University Press.
Horan, C. (2021) Insurance Era: Risk, Governance, and The Privatisation of Security in Postwar America. University of Chicago Press.
Langley, P. (2008). The everyday life of global finance: Saving and borrowing in Anglo-America. OUP Oxford.
Martin, J. (2013). Informal security nodes and force capital. Policing and Society, 23(2), 145-163.
O’Malley, P. (2012). Risk, uncertainty and government. Routledge-Cavendish.
Pimentel, A. D. P., & Pereira, L. G. S. (2022). Auctions and mechanisms. In: Feltran, G. (ed). Stolen Cars: A Journey Through São Paulo’s Urban Conflict, 104-126.
Ruggiero, V. (2015) Power and crime: New Directions in Critical Criminology. Routledge.
Van der Zwan, N. (2014) Making sense of financialization. Socio-economic review, v. 12, n. 1, p. 99-129
Varese, F. (2001). The Russian Mafia: private protection in a new market economy. OUP Oxford.