One in, more to follow?

When a broker network is compared to a Gucci handbag or an iPhone, it raises the question of just how big networks can grow.

This was of course a statement made by John Kitson, intermediary business director at Norwich Union who said that networks are the “new must have fashion accessory”.

It related to the attraction of networks to consolidators, but it appears that it is not just the current networks that will get bigger, and if rumour has it, more and more networks will join the fray.

Last week, the Purple Partnership was born. It is the newest broker network and will be managed by former Westinsure network managing director, Bob Parkins, in collaboration with Jelf.

Jelf Group chief executive Alex Alway will chair the new venture that we will see a consolidator looking to tackle the network market from within.

So why has a consolidator decided to start up its own network? Well for one, why spend millions buying a network, when you can start one yourself. A broker who has access to markets, and can offer IT and compliance, is well set to become a network.

In Jelf’s case, they have all these attributes and have chosen an experienced network professional in Bob Parkins to steer them in the right direction.

By creating a network, a consolidator might also see it as a more viable option than acquiring a broker to distribute its schemes too. The alternative is to have a number of hungry independent brokers to distribute their products too, without even owning them.

The opportunity for networks is there, with thousands of independent brokers not enrolled as members and waiting to be snapped up.

Last week also saw Layton Blackham Business Solutions (LBBS), the broker network owned by AXA, unveil ambitious plans become the leading network within three years. LBBS has 50 members, and is looking to take on the likes of Broker Network to grow to 200 members.

The market is split on the sustainability of networks. Broker Network chief Grant Ellis said that there will only be room for two or three networks in the future. Whereas Steve Burrows, the Cobra Network CEO, is adamant that networks are key to the future and welcomes the arrival of new start-up networks.

He said: "It is good to have healthy competition between networks. It brings more in to the market and it is inevitable that we would get more networks. You have got to start a network that is good because there is no point in starting a talking house as anybody can start an alliance, that is easy.

“A network has to produce value and you have got to have lots of network so that they can compete with each other.”

So, will we see a flurry on new networks? Watch this space.