A report into baggage handling has found that one in 100 plane passengers suffer from mishandled baggage, presenting another compelling reason for travel insurance.

While this figure may seem high, the latest annual “Baggage Report” by air transport industry consultants SITA found that last year the number of mishandled bags fell for the second year in a row – good news for global travel insurers, who usually limit cover on luggage.

Last year the Air Transport Industry (ATI) reported just over 25 million mishandled bags globally, down 24% from 2008, and down a dramatic 40% from 2007.

In other good news for travellers, the number of bags that don’t ever show up was only 3.4% of the total bags mishandled last year.

Last year’s improvement in baggage handling represents year-on-year savings to the air transport industry of $US460 million ($534 million) from a total cost of $US2.96 billion ($3.44 billion) in 2008.

Of the mishandled baggage, 52% went missing during baggage transfer, 16% was due to failure to load, 13% to passenger bag switch, security or ticketing error and 7% went missing during loading or offloading.

The report attributed the significant decline in mishandled baggage to a small decline in passengers (almost 3%); fewer people checking in bags in order to avoid fees; and an improvement in baggage-handling systems.