Insurance prices “have to improve” in the wake of expected $100 billion of insurance industry losses from hurricanes Harvey, Irma and Maria, and earthquakes in Mexico.

And according to industry executive Jonathan Reiss, January renewals “are going to be different”. He also believes insurance-linked securities and special-purpose entities will turn out to be the favoured route for much of the fresh capital entering the insurance space.

He said those entities had worked after the major insured losses caused by hurricanes Katrina, Rita and Wilma in 2005, adding: “Investors always return to what worked best last time.”

Mr Reiss, group chief financial officer at Hamilton Insurance Group, was speaking at InsuranceERM’s Insurance Risk & Capital conference in Hamilton on Friday.

He said: “There’s no question that rates are going to harden in some lines of business. Terms and conditions are going to tighten. You can call it what you will — a market turn, a hardening.”

Margins in most lines of business had become wafer thin or non-existent after a prolonged soft market, according to Mr Reiss.

“There’s no mystery to how we got to where we are today: a prolonged period of low-to-no interest rates, a lack of catastrophes, reserve releases and the influx of alternative capital. At the same time, we are facing a potentially explosive increase in new risks such as cybersecurity and climate change. This market cycle is forcing our industry to face some inconvenient truths,” he said.

Mr Reiss warned that the industry needs to embrace digital technology to a greater degree and jettison old inefficiencies that have been masked by the lack of catastrophes in recent years.

“Disruption in other industries has created an expectation of what the customer experience should be like in the 21st century. The cumbersome, costly and time-consuming processes that have hindered our progress won’t be tolerated by today’s or tomorrow’s clients,” he said.

Companies now need to be nimble and responsive, and the industry as a whole must embrace the digital age, Mr Reiss explained.

“For some, the road to salvation is paved with partnerships between insurance and technology. In other words, insurtech.”

He mentioned the inaugural Bermuda insurtech conference, Global Reinsurance’s Innovation & Insurtech event, to be held on November 6.

Mr Reiss highlighted Hamilton as an example of a business using technology and data science “to create a nimble, responsive, client-centric company that can succeed in any market”.

Hamilton owns one-third of Attune, which uses proprietary and publicly available data to “reinvent” how business owners policies are priced, written, issued and bound.

“Inside Hamilton, we’re making sure the right IT foundation is in place to streamline our processes and strip out inefficiency,” said Mr Reiss.

How to attract more young people into the industry is also a concern.

“Our former CEO Brian Duperreault once said insurance should be catnip to the millennial generation, who care so much about having a job that makes a difference.

“But in most of the world, our image is woeful. In the US and the UK, less than 5 per cent of high school and college undergrads even consider a career in insurance. In the US, there’s a looming talent crisis as more than 300,000 managers approach retirement in the next three years. No one is clamouring to take their place.”

The industry was now looking for employees with technology skills, such as software engineers, system developers and data scientists.

And Mr Reiss also spoke about the “protection gap”. A recent industry statistic indicated a 68 per cent gap between insured losses and economic losses from catastrophic events. The gap between insured and uninsured is as prevalent in the US as it is in Asia.

“The threats the protection gap represents to the developed and developing world are indeed perilous,” said Mr Reiss.

“The silver lining in storms like Harvey is the chance to begin a dialogue about how the private and public sector can work together to build resilience in unprotected communities.”

He mentioned Blue Marble, the consortium of insurers and reinsurers that Hamilton helped form in 2014 to provide microinsurance in developing regions. Two pilot projects are under way.

Giving his outlook for insurance in 2018, Mr Reiss said: “I see leaner, more efficient companies. I see greater diversity in our workforce. I believe that we’re going to see some genuine breakthroughs as a result of investments in technology and in new partnerships.

“There is no room for luddites — 2018 might very well be the tipping point, where our industry leaves the analogue behind and takes that final step into the digital age.”