From Lost Bags to Big Gains: Inside the Baggage Insurance

While often overlooked in the broader travel insurance category, this niche segment is quietly gaining altitude alongside global travel recovery and digitization.

What’s driving growth? Increased airline traffic, higher customer expectations for travel protection, and the proliferation of embedded insurance platforms—especially through online booking engines and travel aggregators. As travelers demand frictionless, real-time claims and coverage options, insurers are leaning on APIs and partnerships to distribute baggage policies at scale.

Why it matters: For strategic buyers and investors, baggage insurance isn’t just ancillary revenue—it’s a volume-driven product with sticky distribution potential. With global travel volatility rising, carriers and platforms offering seamless baggage protection will be best positioned to monetize trust.

Baggage Claims Rise with Global Mobility

The long arc of international travel is bending upward again. After the sharp pandemic collapse, global tourist arrivals are rebounding to align with their 5.4% long-term CAGR, as highlighted by the Hodrick-Prescott filter. From just 25 million in 1950 to over 1.5 billion projected travelers by 2035, the growth is both secular and resilient.

Why this matters: baggage insurance is a function of volume—and that volume is coming back fast. With the recovery in travel now realigning with long-term historical trends, the embedded insurance market for luggage protection is poised to scale. Expect increased demand not only from individual travelers, but also from OTAs, airlines, and platforms seeking to bundle policies into frictionless user journeys.

Methodological note: The Hodrick-Prescott filter, commonly used in macroeconomics, extracts the smooth “trend” component from a time series. Applied here, it filters out short-term volatility (like COVID) to highlight the underlying trajectory of travel demand, confirming that current growth is a reversion—not a rebound. The HP filter minimizes the sum of the squared deviations of the actual series from its trend component, penalizing rapid changes in the growth rate of the trend itself.

Bottom line: A structurally growing travel base means structurally growing tailwinds for travel-adjacent coverage like baggage insurance. For investors, the line between travel recovery and insurance monetization is increasingly thin.

Where is luggage being lost?

Top 10 Airports losing most luggage 

If your luggage is going to vanish, odds are it’s in Delhi. Gandhi International tops the global list with a 1 in 48 chance of lost baggage—110,816 bags misplaced in just 30 days. Mumbai and London Heathrow follow closely, underscoring the scale challenge at major global hubs.

This matters for insurers and underwriters for two reasons: risk concentration and customer experience volatility. While most airports on the list are high-traffic hubs, some—like Newark or Gatwick—reveal disproportionately high loss rates relative to traffic volume. Complaints don’t always correlate either: London Stansted posts the worst luggage score (2.84) with the fewest complaints, signaling potential underreporting or weak feedback loops.

For platforms and insurers embedding baggage coverage, this creates a pricing and positioning opportunity. Dynamic pricing based on airport risk, or proactive messaging at high-risk locations, can drive conversion, differentiation, and trust—especially for digitally native travelers expecting real-time protection.

Most luggage lost by airline region

Regionally, North America and Europe lead in absolute baggage losses—161,557 and 141,820 bags lost in the last 30 days, respectively—despite having lower loss probabilities than developing markets. Meanwhile, Asia has the lowest loss rate at just 0.09%, but its massive passenger volume still translates into 163,257 lost bags, the highest globally.

This divergence underscores a key strategic point: volume trumps rate. Even low-risk markets like Asia generate high claims potential at scale, making APAC a hidden growth frontier for embedded baggage insurance. Conversely, Latin America and Africa may present underpenetrated markets for proactive coverage education given their improving performance but higher perceived risk.

Most luggage lost by airline

India’s carriers dominate the global baggage mishandling leaderboard: IndiGo and Air India take the top two spots, with loss probabilities of 1 in 41 and 1 in 36 respectively—far above global norms. Together, they account for over 131,000 bags lost in the past 30 days, raising major questions around operations, accountability, and coverage adequacy.

Lower-tier airlines like Frontier, SpiceJet, and Aeromexico also feature prominently, while Virgin Atlantic and Spirit Airlines round out the list with better—but still material—loss counts.

Strategic implication: Regional, by Airline and by Airport, underwriting models should look beyond headline probabilities and focus on absolute exposure, claim frequency, and consumer experience scores—especially as airlines and OTAs. 

These are not statistical outliers—they’re distribution signals. High-risk routes, airlines, or airports present ideal use cases for real-time baggage coverage, dynamic pricing, and value-add upselling in embedded travel insurance workflows.

US Focus

In the U.S., baggage mishandling remains a systemic issue concentrated across both carriers and key hub airports. Southwest and American Airlines lead in absolute mishandled volume, losing 32,810 and 31,231 bags respectively in October 2024 alone. Delta, United, and Alaska round out the top five, each misplacing more than 7,000 bags monthly. This volume isn’t just operational—it’s insurable.

While the probability of loss per bag remains low relative to global averages, the sheer size of the U.S. air travel market—with carriers like Southwest enplaning over 10 million bags monthly—creates a high-risk surface for travelers and a high-margin opportunity for insurers. Notably, smaller regional carriers like PSA and Envoy still generate thousands of claims, suggesting that risk isn't just scale-dependent—it's system-wide.

On the airport side, the risk is geographically concentrated. Chicago O’Hare (ORD), Las Vegas (LAS), and San Diego (SAN) rank as the top three U.S. airports for lost luggage, with major hubs like Atlanta (ATL), Philadelphia (PHL), and Los Angeles (LAX) also appearing in the top ten. This regional distribution highlights clear nodes for location-aware insurance offerings, enabling better underwriting and targeted coverage at check-in.

Strategic Implication: U.S. travel insurers, OTAs, and card-linked platforms should be designing dynamic, airport- and airline-adjusted pricing models, particularly for embedded baggage insurance. Messaging embedded coverage at bag drop or within confirmation emails for ORD or LAS could dramatically increase conversion while lowering cost-to-acquire. Meanwhile, carriers with consistent mishandling rates (e.g., Southwest) are ripe for co-branded or opt-out coverage offers.

Bottom line: In the U.S., baggage loss isn’t a bug—it’s a feature of a strained logistics system. For insurers, that means predictable risk, embedded distribution points, and scalable growth—if they can get the model right.

Conclusion

Baggage insurance is no longer just a travel upsell—it’s becoming an embedded infrastructure layer in the modern travel ecosystem. With global tourism realigning to long-term growth trends and mishandling risks clustering around known airports, carriers, and regions, the opportunity for scale, automation, and margin is clear.

What the data shows is both a pain point and a roadmap: high-volume routes with known friction are predictable, priceable, and ready for protection. Embedded players, OTAs, and insurers who can align coverage delivery with traveler context—airline, route, airport, and timing—stand to capture outsized value.

As global mobility continues to rise, so will expectations around protection. And in that shift, baggage insurance is quietly becoming one of the most scalable, data-rich frontiers in travel insurance. For underwriters, tech platforms, and strategic investors, the lost bag is now a signal—not just a cost.

Sources & References

BBC. (2023). Lost luggage showing signs of recovery after hitting 10-year high. https://www.bbc.com/news/business-66438234 

Bureau of Transportation Statistics. (2025). Air Travel Consumer Report: December 2024, Full Year 2024 Numbers. https://www.bts.gov/newsroom/air-travel-consumer-report-december-2024-full-year-2024-numbers#:~:text=For%20December%202024%2C%200.7%25%20of,1.3%25%20cancellation%20rate%20in%202023.&text=The%20627%2C365%20flights%20operated%20in,flights%20operated%20in%20December%202023

Business Research Insights. (2025). Baggage Insurance Market Size. https://www.businessresearchinsights.com/market-reports/baggage-insurance-market-108985 

FOX. (n/d). What airports, airlines lose the most luggage? https://www.foxweather.com/lifestyle/what-airports-airlines-lose-most-luggage 

Luggage Losers. (2025). A live ranking of airlines by how much luggage they are losing right now. https://luggagelosers.com/ 

Passengers Terminal World. (2023). Up to US$7.45bn in luggage lost at airports in 2022, MoneyTransfers.com finds. https://www.passengerterminaltoday.com/news/baggage/up-to-us7-45bn-in-luggage-lost-at-airports-in-2022-moneytransfers-com-research-finds.html 

Statista. (2024). Number of international tourist arrivals worldwide from 1950 to 2024. https://www.statista.com/statistics/209334/total-number-of-international-tourist-arrivals/ 

THE OFFICE OF AVIATION CONSUMER PROTECTION. (2024). Air Travel Consumer Report. https://www.transportation.gov/sites/dot.gov/files/2025-01/December%202024%20ATCR.pdf