Easy enough to remove the original loop & either add a fixed belt loop similar to the F~S knife scabbard, or add a fixed loop lower down the existing scabbard body, so that the upper of the new loop is about the same length as the knife handle, or slightly shorter
I like the Finnish knives, but never been a fan of the little metal connector that keeps the sheath & loop together
This is a traditional Nordic sheath. I am an amature leather worker and my idea would be to glue a thin piece of leather in the throat of the sheath to tighten it up. The belt loop thing is more tricky , I would make or have made a belt loop part which would have a split lower part that would straddle the existing seem and would be able to be riveted in place using two flat headed copper rivets (as stitching would be v tricky).
I hope my description makes sense , would be better to draw it!
Make a new one sympathetic to original but that addresses the poor knife retention issue/s.
This way you can easily pimp it with multiple carry options during construction and with 100% handsewn assembly.
I'm with klenchblaze on that, keeps your old man's in tact/sentimental. Is the loop like that to allow you to sit etc - not rigid and dig back in to you.
To get the sheath to tighten up a bit, try soaking it in warm water, place the knife in the sheath and let it dry slowly. When the leather is dry you will have to feed it with something like dubbin