1st Generation: These are black box systems which were probably enforced/encouraged on an insurer’s underwriting team to ensure consistency as well as a bare minimum standard of underwriting decision making, for example through reinsurers offering discounts where such systems were deployed in a client’s underwriting process for new business. These systems are not typically controlled by the insurer, nor does the insurer have the ability to adapt or change them. The sole benefit to the insurer seems to come through the lower reinsurance treaty price. These systems are not easily adapted or changed to meet the changing needs of the insurance company.
2nd Generation: These are systems which are adaptable or changeable-in theory even by the insurance company-they have open interfaces which you can program your underwriting logic against. In practice the level of expertise necessary to achieve this has meant that such changes can generally only be safely made by the original developers of the systems (the vendors, typically reinsurance companies) with one or two notable exceptions where the insurance company has for example, hired staff with deep knowledge of the system who previously worked for the vendor, or where over many years of dedicated effort they have built these skills in-house. These systems can be changed, but only by IT experts with solid programming skills and deep knowledge of the product.