If you had follown the development, you would know why.
It was made so that there was more pvp.
Looting equipment is useless for the killer, since it is damaged and so cannot be sold. The real reward for a PK is the inventory of a character. Gold, rare reagents, divine rewards, and maybe their cart. That's why a pk roams around. Surely not to loot a yellow durability tier 1 armor which he will not even pick up from the body.
At the same time though losing the equip sucks a lot for the victim. So people were not engaging in pvp for the fear of losing it.
This was the best compromise. PKs get their reward, but the damage on the victim isn't uselessly big.
Except if you have bad karma, in which case you also lose equip.
Tartaros clearly will keep the full loot rules when it is out.