Lee Yun-ok, a 60-year-old owner of a humble coffee shop in Seoul, shudders when recalling a small but painful experience from a car accident.

A few years ago, she was pulling her car out from an on-street parking lot after work one evening. She was on a glitzy Gangnam street in the southern part of the city commonly teeming with expensive luxury vehicles like BMWs and Mercedes Benzes.

She was going in reverse at a low speed but wasn't aware of a BMW parked at a crossroad nearby. Her car touched the German-brand sedan on the side and left a circular dent on the front door, while her 10-year-old Credos, a mid-size sedan manufactured by local brand Kia Motors Corp., suffered a visible scratch on the rear bumper.

Then came the real jolt.

Insurance agents from the two parties calculated the damages, and Lee was told it would cost around 4 million won ($3,700) to fix the shallow dent on the BMW, and that she would have to pay 500,000 won more in insurance premiums for the coming three years.

"I felt sorry for the BMW owner because I caused the scar to his precious vehicle," Lee said. "But after hearing the cost and the premium, I got so angry at such a discriminative price policy. I spent only 100,000 won, or probably less, to repaint my car."

With the increasing number of imported cars on South Korean roads, many drivers share Lee's experience.

The latest data from the transportation ministry show 1,113,333 foreign-made cars were registered in South Korea as of end-2014, taking up 5.5 percent of the total number of registered vehicles of 20,117,955. The portion nearly doubled in the past five years after reaching 2.9 percent in 2010 and is likely to increase further. Just last year, 215,000 foreign cars were sold, jumping 25.5 percent from a year earlier and accounting for 13 percent of the entire domestic cars sales of 1,658,000.

The Korea Insurance Development Institute said such an increase in the number of foreign cars also pushed up the amount of insurance payouts to cover their repair costs.

In 2013, local insurance companies paid a record 5.1 trillion won of insurance money to repair automobiles, 967.3 billion won of which went to imported cars, up 23.5 percent from a year earlier. This is 18.9 percent of the total insurance payment to cover 7.4 percent of the total number of reported car accidents, according to KIDI.

Another state statistics show it cost an average 2 million won to replace a part of a foreign-made vehicle, compared with 435,000 won for a locally produced car.

"The Financial Supervisory Service has acknowledged the asymmetric structure of the car insurance policy, and came up with some guidelines last year," said Won Il-yeon from the Insurance Supervision Department of the FSS.

"We've ordered insurance firms to redesign the vehicle classification and impose premiums accordingly last year. So expensive car owners are paying more than those with cheaper vehicles."

The FSS and KIDI adjusted the criteria for setting insurance premiums and added more tiers in categorizing passenger cars, from 21 to 26 groups last year. As a result, premiums for local car drivers fell 2.9 percent on average while those for foreign car owners rose 11 percent.

For a male driver in his 40s with no record of an accident, his insurance premiums would be 940,000 won per year when driving a BMW 320d sedan. If he drives a K7, Kia's large-size sedan, the premiums would go down to 660,000 won.

However, experts say such steps aren't enough

Foreign-made car owners pay about twice more in premiums than other drivers, but they receive four to five times more benefits in case of car accidents, they say.

"This is why people keep complaining that domestic car owners 'feed' foreign car drivers," said Song Yun-ah, a researcher at the Korea Insurance Research Institute. "We have to finely break down the level of vehicles and drivers as much as we can and tailor the insurance policy in order to fully reflect the risks of a possible accident and pay out the exact amount of insurance. It's ideal but impossible, as you know."

Song suggested measures similar to what the government did late last year. To break the near oligopoly in car parts imports for foreign brands, the government opened the market to private importers. It also started a state authorization system to certify repair shops that can be trusted to fix imported cars. Both measures were intended to bring at least some degree of competition.

"It costs too much to fix a foreign car mainly because of expensive auto components. It raises the insurance payments and causes the complaints," said Song. "Narrowing the parts price gap between foreign and domestic cars is the most direct and effective way to solve the problem." (Yonhap)