You most likely have records in your table with IDs that are bigger then the next value in your identity sequence. To find out what the current value your sequence is about at, run the following query.
select s.nextcachefirstvalue-s.cache, s.nextcachefirstvalue-s.increment
from syscat.COLIDENTATTRIBUTES as a inner join syscat.sequences as s on a.seqid=s.seqid
where a.tabschema='SCHEMA'
and a.TABNAME='TABLE1'
and a.COLNAME='SYSTEM_USER_KEY'
So basically what happened is that somehow you got records in your table with ids that are bigger then the current last value of your identity sequence. So sooner or later these ids will collide with identity generated ids.
There are different reasons on how this could have happened. One possibility is that data was loaded which already contained values for the id column or that records were inserted with an actual value for the ID. Another option is that the identity sequence was reset to start at a lower value than the max id in the table.