Individual inventory mainly came from what we are used to with the games we've played. It is also meant to add some strategy. The player has to learn the strengths of their party and make decisions on how to distribute their loot among the party, and sending it back for quests. As we expand the game we will be working to optimize the flow, but also don't want to simplify the game too much that it is boring. Maybe we will add an option in the difficulty settings that will allow use of any items the group has, or at least allow accessing the Party Bag in addition to their Personal Bag.
The problem with auto distribution is that there is no one best distribution. We would need to create a system for players to decide the rules for how to distribute things.