alt Hacker NewsMost of the "permanent losses" are because the passenger gives up or doesn't care terribly much - hence all the luggage at the airline outlet stores.
Most airlines do eventually find the bag, and if you kept in touch they'll usually even get it to where you are, even if you've since returned.
I honestly have no idea how those dynamics work. At some point, the airline presumably pays, travel insurance does, or a combination of the two. At some point if it's just a bunch of old travel stuff, I guess I can see a customer shrugging, collecting the money, and dropping the whole thing.