Exactly! He doesn't mean some stupid school pack. Hiking/backpacking packs can be really expensive and the OP's friend didn't loose EVERYTHING HE HAD. The guy was on a trip, he likely lost all of the clothes with him and his wallet (If the friend's Passport was stolen too, that was just an idiot move to not always have it on your person). All of that is probably replaceable for less than what the backpack cost. OP, just tell your friend when he gets back that, while you understand the that it was stolen and the situation isn't totally his fault, you expect him to replace it. You lent it to him in good faith; he let it stolen and should then replace it.

But, if he claims it back on insurance, he gets his money back. But his friend wouldn't get his sentimental things back.. Anyway, i mean it sucks bags cost that much and he got it stolen, but he shouldn't have lent it to his friend if it was that expensive. Not that i don't feel bad for OP, but just making some points that may not have been mentioned.